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While the works cost thousands of dollars, some banks are now offering low-interest rate loans to Australians to help pay for such upgrades. In Fung’s case, making her home more energy-efficient also made her eligible for a cheaper interest rate on her home loan.
Jake Harvey, founder of 28Watt, which helps people to find the cheapest way to finance home energy upgrades, says once a standardised tool is available to assess the energy efficiency of an existing home, it will become a “catalyst” for more banks to offer discounted mortgages.
Energy efficiency measures can save homeowners money on their electricity bills, as well as on their mortgages. Source: SBS News
Harvey points to the Netherlands, where every home is assessed and rated on its energy efficiency, and major banks tie their home loan rates to this rating. He believes all Australian homes will eventually be required to disclose energy efficiency performance.
State governments are also introducing measures to encourage greater energy efficiency even in rental properties. This week, the Victorian government announced that minimum efficiency standards for rental homes will be phased in from 2027, including requirements for insulation, draught-proofing, cooling in living areas, and four-star showerheads.
Boosting a home’s energy efficiency to five stars could also reduce the need for heating and cooling by 40 per cent. Source: SBS News
What are green loans?
Harvey says the lowest interest rate available is 2.79 per cent from RACQ, which generally requires the homeowner to have a mortgage with the bank, although not every bank will insist on this.
While Harvey says some lenders pay the company a small commission if they are recommended, they will always list the cheapest option first.
Draughtproofing a home can reduce energy use for heating and cooling. Source: Getty / Westend61
Homeowners who improve the energy efficiency of their homes may also be eligible for discounted interest rates on their mortgage.
“We were able to offer the Clean Energy Home Loan at reduced rates, partly thanks to the support of the Federal Government-backed Clean Energy Finance Corporation, who contribute to the reduced rate, with the remaining portion of the reduction at the time funded by Bank Australia.”
Saving $1,000 a month on repayments
Fung secured the loan in April after spending around $12,000 on switching from gas heating and cooking to electric options.
Amanda Fung says her energy bills have not gone up despite being at home all day on maternity leave and using the heater constantly to warm her baby’s room. Her husband also works from home more frequently. Source: Supplied
The upgrades have not reduced the cost of Fung’s electricity bills, but she says this is because she is using more power now that she’s on maternity leave.
“[Heating in the] baby’s room runs all day, all night, whereas before we wouldn’t have run the heating for that long.”
‘Everything feels dry and warm’
The 32-year-old says he and his family did not use their previous gas heating much because they understood how energy inefficient it was to run, so they chose instead to wear four or five layers of clothing at times.
The house was really cold to the point of potentially being unhealthily cold in winter.
He says the biggest drops in their electricity usage came after installing solar in February as well as replacing their old hot water unit with a new heat pump unit, which reduced their usage by around 40 per cent.
Darcy Dunn spent almost $77,000 on energy efficiency measures over the past five years. Source: SBS News
The NatHERS rating of his home went from one star to 7.9 stars. Dunn says double glazing and wall insulation were crucial to achieving this result.
“Coming home after a day where there’s been no heating on in the house, you walk in and it’s still quite comfortable.”
What are the challenges?
She says some banks like the CBA previously only gave discounted mortgage rates to people who could achieve a green star rating by the Green Building Council of Australia, but this rating process is incredibly expensive, making it unaffordable for many homeowners.
We’ve had a number of products being put out into the market that have not worked for various reasons, but once they get the design of the product right, it’s a phenomenal success.
“So if someone had to come to me now … I can find them an option.”
