Can you get a discount for your energy-efficient investment property?

By Marie Mortimer | 21 Feb 2022

Promoted by loans.com.au

We all know that we should be more energy efficient in our everyday lives, like using the washing line instead of the dryer or switching off appliances when they’re not in use. But when it comes to making our homes more energy-efficient, it isn’t always affordable to do so.

However, with low rate products like green investor loans, you can receive a discounted rate if the home you purchase was built less than 12 months ago and it complies with a certain environmental standard based on the Nationwide House Energy Rating Scheme (NatHERS).

What is a green investor loan?

A green home loan is a home loan specifically tailored towards energy-efficient homes. If the home meets a certain energy rating or contains certain technologies, a green home loan usually offers a discounted interest rate and lower fees to encourage people to adopt sustainable living practices and help them manage the (often) higher upfront costs.

Our Green Investor loan is like our regular variable rate investor loan, the key difference being that you’ll benefit from a discounted interest rate if the home you’ve purchased is less than 12 months old and it complies with a certain environmental standard based on the Nationwide Energy Rating Scheme (NatHERS).

NatHERS is a star rating system (out of ten) that rates the energy efficiency of a home, based on its design. Star ratings are based on information about the home’s design, construction materials and the climate where the property is being built.

Our Green Investor loan has a competitive discounted variable rate of 2.34% p.a.* (2.63% p.a.* comparison rate). A discount of 0.40% off the interest rate applies for the first 5 years of the loan only for new homes with a NatHERS rating of 7 stars or higher. If you’re building a new property, the discount during the construction period is variable depending on the product and can be up to 1.59%. After 5 years, the discount no longer applies, and the interest rate will increase by 0.40% for the remaining term of the loan.

What kinds of upgrades/installations do you need to make your home green?

There’s no one standardised set of things your home needs to be considered green, but it’s a safe bet to include any (or several) of the following:

  • Solar or gas hot water systems 
  • Solar panels, solar battery storage systems
  • Solar pool heaters, heat pump systems 
  • Rainwater tanks, greywater treatment systems 
  • Energy-efficient LED lights in over 75% of the property
  • Certified double-glazed windows
  • Underfloor, wall and ceiling insulation that meets the National Construction Code
  • Electric vehicle charging port(s)
  • Real-time energy monitoring systems

Frequently asked questions

How do I qualify for a green investor loan?

To qualify for the discounted loan, a NatHERS certificate from an accredited assessor is required which shows a seven-star rating or higher. Your builder will be able to assist you in getting a NatHERS certificate from an accredited assessor with your building plans.

You will also need to provide a few documents with your home loan application, some of which include:

  • Two most recent consecutive payslips for each applicant
  • Three months bank statements showing regular salary credits, including most recent salary credits with the name of the employer evident
  • Evidence of Salary Sacrifice or Packaging (if applicable)
  • Evidence of Company Vehicle/Car Allowance (if applicable)
  • Six consecutive months of home loan statements showing consistent repayment history (if applicable)

On top of that, we require a minimum deposit of 10% of the purchase price of the property, or the current value of the property you’re refinancing (a 20% deposit is preferred to avoid paying Lenders Mortgage Insurance).

You can see if you prequalify for your home loan. Once you have completed this, we can generally get preliminary approval to you within 48 hours.

What is the NatHERS rating, how is it calculated?

The Nationwide House Energy Rating Scheme (NatHERS) is a star rating system out of ten that rates the energy efficiency of a home, based on its design. Star ratings are based on information about the home’s design, construction materials and the climate where it is being built.

To calculate a NatHERS rating, a NatHERS Accredited Assessor will use software that models expected indoor temperatures based on data specific to that property, including information on design and construction of the home, climate, and common patterns of household use.

The NatHERS Accredited Assessor then enters data into the software to develop a simulation model of the house or apartment, including:

  • size and function of rooms
  • size and specification of openings
  • building materials/windows/products
  • type of construction
  • dwelling orientation
  • location

The software will then model how much artificial cooling or heating occupants may need to stay comfortable during a typical year. It does this by firstly simulating how the local climate heats and cools the house every hour of every day of the year.

As soon as the temperate inside falls outside of a ‘comfortable’ range, the software models the need for heating and cooling based on the assumption the occupants in the house will open or close windows and blinds/awnings before resorting to using artificial heating or cooling.

The total estimated annual heating/cooling requirements are then converted to a star rating out of 10.

An example of a NatHERS certificate may be useful when looking at what elements of your home require the Certificate Check. An example report is here.

If you’re designing a new home, NatHERS has 7-star house plans available on their website which outlines building specifications, materials, appliances, and site orientation that has been architect-designed and tailored to suit different climates across Australia.

Talk to our lending specialists today

If you’re ready to do your bit for the environment and access a competitive rate on your investment loan, apply online or chat with one of our lending specialists today.

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Marie Mortimer is Managing Director of loans.com.au, one of Australia's largest online lenders. Since Marie started the business more than 10 years ago, Marie has grown loans.com.au into a company with $6 billion worth of home and car loans. Marie is dedicated to improving financial literacy for all Australians and is passionate about the FinTech industry in Australia. When she isn't at work, she loves to spend time with her husband and two young children.

loans.com.au is an online lender for home and car loans. For more than 10 years, Aussies have trusted the locally based loans.com.au team to support them with low home loan and car loan rates, approved quickly through the online loans.com.au app.

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