What is a green loan?

The lender sets out what the money may be spent on, then checks that the work matches. Before drawdown, or as a compliance step afterwards, you may be asked for quotes, product model numbers, installer invoices or an energy assessment report.

Secured options such as a home loan top-up take security over property; smaller unsecured facilities do not. Green loans can usually sit alongside rebates and government grants. A rebate normally reduces the amount you need to borrow, so confirm whether it is paid to you or the installer, and whether funds are released before or after it lands.

Green loans list the works or equipment they cover. Typical permitted uses include solar photovoltaic systems, battery storage and hybrid solar plus battery installs, electric vehicle chargers and the electrical work that goes with them, heat pumps for space heating and hot water, energy-efficient HVAC, insulation, draught-proofing, efficient windows and doors, LED lighting and smart controls, and certified energy-efficient appliances.

Building energy assessments and the installation labour tied to a listed upgrade are often eligible too. Check whether the lender accepts mixed projects, such as solar plus insulation, and whether one facility can cover both equipment and installation. Commercial upgrades count with some lenders: a cafe swapping old air conditioning for a high-efficiency heat pump is a common case.

Unsecured green personal loans suit smaller projects and need no security. Secured options, including home loan top-ups and green mortgages, run for longer terms and suit whole-home retrofits, but they add to debt secured against your property. Installers and specialist providers sometimes offer finance at the point of sale, and programs backed by bodies such as the Clean Energy Finance Corporation may co-fund eligible households and small businesses.

Compare the rate type, fees, maximum amount, term, security and the comparison rate, which folds most fees into a single figure,, along with early repayment or break costs. Ask for written confirmation of eligible uses, product specifications and any third-party accreditation, so you can tell a genuine green facility from a standard one with a green label.

Which rules apply depends on the purpose. A green loan for your own home is consumer credit, so responsible lending obligations apply. Finance taken wholly for business purposes, such as a cafe upgrading its air conditioning, sits outside the National Credit Code.