The Commonwealth Bank of Australia (CBA) has made its Green Loan available to all of its eligible home loan customers nationally.
First announced in February 2021, the Green Loan is intended to help mortgage holders install environmentally-friendly technology in their homes. According to CBA, installation of these green technologies could see a borrower’s energy bills drop by more than $500 per year.
Commonwealth Bank group executive, Angus Sullivan, said that the CBA Group has “a responsibility to provide solutions for customers that reduce their environmental impact.”
How can the Green Loan be used?
The CBA Green Loan lets you borrow between $5000 and $20,000 to purchase and install clean energy products at the address of the security property, such as:
- Solar panels with a system size equal to or greater than 6 kilowatts (and inverter if applicable)
- Battery packs with a system size equal to or greater than 5 kilowatts-hour
- Solar hot water system with a system size equal to or greater than 250 litres
- Heat pump hot water system with a system size equal to or greater than 250 litres
- Electric vehicle charging station(s)
These products must be purchased and installed by retailers and/or installers approved by the Clean Energy Council, to ensure standards are met.
How does the loan work?
Borrowers taking out a Green Loan will pay a fixed interest rate of 0.99 per cent (comparison rate 0.99 per cent) over a term of up to 10 years, with no upfront or ongoing fees, and no early repayment fee.
The Green Loan is available with principal and interest repayments only. While extra repayments can be made freely, there are no offset, redraw, or split loan options available.
CBA’s green loan works a bit like a construction loan in that you don’t receive the full sum of money as an upfront lump sum, but instead receive what you need to purchase and install green technologies as required. For example, if you’re preapproved to borrow up to $20,000, and your final invoice is $17,000, you won’t receive the extra $3000 (though you’ll only pay interest on the $17,000 you’ve borrowed).
While the Green Loan is secured by the equity in your property, it is considered a separate loan to your existing CBA mortgage. This means you’ll need to budget for its repayments separately.
Who is eligible for the loan?
The Green Loan is available to Commonwealth Bank mortgage holders whose equity can be used to secure the loan, provided the Loan to Value Ratio (LVR) of your mortgage plus the Green Loan doesn’t exceed 80 per cent.
To be eligible, you’ll need to have a minimum outstanding loan balance of $150,000, secured by one property only that’s not an apartment or a commercial property.
The Green Loan is not available for construction loans, bridging loans or equity unlocks for seniors. Borrowers with guarantors, including government guarantees such as the First Home Loan Deposit Scheme (FHLDS), aren’t eligible.
Before you apply for any Green Loan, be sure to compare Green Home Loans from a range of different lenders to find an option that may suit your needs.