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Want a 40 basis point discount on your mortgage interest rate? Go green

Posted: 14 January 2020 3:51 pm
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If you're buying an energy-efficient home, you can get a special deal from Bank Australia and the Clean Energy Finance Corporation.

The Clean Energy Finance Corporation (CEFC) is partnering with Bank Australia to give buyers and builders of energy efficient homes a 0.4% discount on their mortgage.

Here's the deal:

  • You must be buying or building a property with a 7-star energy efficiency rating (according to the Nationwide House Energy Rating Scheme).
  • If approved, you will receive a 40 basis point discount on your interest rate for up to 5 years.
  • Bank Australia will offer the Clean Energy Home Loan while the CEFC is providing $60 million in investment to the offer.

The mortgage offer creates an incentive for building cleaner, greener homes that are more energy efficient.

The Nationwide House Energy Rating Scheme (NatHERS) "materially exceeds the minimum standards of the National Construction Code, and homes built to this rating require less energy for heating and cooling," according to the CEFC.

"The Clean Energy Home Loan is a great example of how the business of banking is an essential part of the solution to the climate crisis," said Bank Australia Managing Director Damien Walsh.

For now, this offer is just for buyers and builders. But the bank is also looking at making this loan available to home owners making "green renovations" to their properties.

How does the Clean Energy Home Loan compare?

Owner-occupier rates for this loan start from 2.44% for 2- and 3-year fixed rates and 2.88% for variable (2.78% if you're borrowing more than $500,000). 2.44% is lower than almost any comparable rate but there's a significant caveat: with a maximum loan-to-value ratio of 70%, you'll need a 30% deposit to qualify.

This puts the offer out of reach for most Australian borrowers. You can get the loan with a smaller deposit but with higher rates.

The lowest fixed rate offer of 2.49% for borrowers with deposits under 30% is still a very competitive rate. And if you're looking for a green home loan, it could be a pretty good option.

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