Green Home Improvements – The Home Energy Upgrade Loan Scheme versus Mortgage Top Up

May 16, 2024

How to finance Green home improvements?

SEAI grants and increasing energy costs have been the prompts for many to action home improvements projects to make their homes warmer and more energy efficient.

Latest figures show that the number of Green personal loans increased by over 90% in 2023 as homeowners continue to invest in their homes.

The Government’s Home Energy Upgrade Loan Scheme could see this sector grow further, with loans available from €5,000 to €75,000 at interest rates from 3.55% available over a 10 year period. The loan is made available prior to completion of the works.

For many of our clients however, the cost of servicing a separate Green loan aswell as their mortgage is prohibitive. An alternative is to look to top up your mortgage to carry out works and if the building energy rating is improved this can lead to lower rates on the full mortgage amount.

Every home has a building energy rate and if you improve your rating to an A or B then you could be eligible for rates as low as 3.45%.

In the last month PTSB, Haven Mortgages and BOI have all either decreased their Green rate options or introduced new EcoSaver rates.

If you have already carried out home improvements which positively impacts the building energy rating of your home then you could be eligible for a much lower rate on your mortgage by switching.

Looking at some figures – what would be the cashflow position of taking a Green personal loan or topping up your mortgage for Green home improvements.

If we take a mortgage holder with an outstanding mortgage of €250,000 over a 25 year term, with one of the pillar banks (AIB) they can access a 5 year fixed rate non Green at 4.65% and their repayments would be €1,411 per month.

If they carried out home improvements at a cost of €50,000 they could look to release equity from their home bringing their mortgage to €300,000 and if they have an A or B rating then the Green rate would be 5 year fixed from 3.45%

Repayments on €300,000 at 3.45% over a 25 year term would €1,494 be per month.

If the €50,000 is taken over 10 years under the New Government loan scheme at best rate of 3.55% then repayments would be €496 per month. If we take the mortgage at €250,000 and repayment non Green of €1,411 then total monthly outgoing is €1,907 per month.

For many homeowners it is prohibitive to take on a separate home improvement loan as the total repayments are too might on a monthly basis.

By wrapping the home improvements into their mortgage and availing of a Green rate it opens a more affordable option to carry out home improvements.

Considering home improvements and looking for some advice – speak to our team – Start here 

Rates correct as at 16/05/2024

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