It’s no secret that building costs have been sky high of late and so it’s welcome news to see the launch of a new low cost loan scheme to assist with home upgrades. Now we would love that to mean that you get to borrow at a low interest rate for a beautiful new sofa, sideboard or statement lighting but this loan scheme is directed at improving energy efficiency. And let’s be honest, a home can look as fabulous as you like but if it’s cold or draughty, then it won’t be much fun to live in. But there is a silver lining, 25% of the loan can be used for non energy efficiency measures so there is a little wriggle room for adding some new furniture to your newly warm home.
We looked at the main elements of the New Home Energy Upgrade Loan Scheme. The low interest loan programme has been initiated by the Irish Government with the aim of assisting more households in enhancing their home's energy efficiency, thereby reducing energy bills and emissions. This €500 million scheme has been eagerly awaited by homeowners who are keen to undertake upgrades such as retrofitting or installing solar power and making their home as comfortable as possible.
So what's the loan about and how much is it?
The distinguishing feature of this new home energy upgrade loan is its low-interest rate. Lenders are required to offer rates lower than usual for this type of borrowing. Permanent TSB, the first bank to participate, has set its rate at 3.55%. According to the Department of Environment, typical interest rates for green home improvement loans currently range from 6% to 7%, while other personal loan rates can go as high as 14%.
Borrowers can obtain loans ranging from €5,000 to €75,000 under this scheme, with repayment terms of up to ten years.
These loans are provided without requiring collateral (eg you don’t have to stake your house on it), which makes it easier for homeowners to access them.
What can the loans be used for?
Homeowners must utilise the loan for qualifying home energy upgrade projects eligible for a grant from the Sustainable Energy Authority of Ireland (SEAI). These projects include insulation, heat pumps, and solar power, among others, as listed on the SEAI website. These projects must be expected to enhance the home's energy performance by at least 20%, assessed using the Building Energy Rating (BER). While up to 25% of the loan value can be allocated to non-energy efficiency-related projects, such as general home improvements, it cannot be used for installing fossil fuel boilers.
It is anticipated that these energy upgrade projects will not only decrease homeowners' energy expenses but also contribute to climate preservation by reducing greenhouse gas emissions and enhancing energy efficiency.
What about renters?
At the moment, this loan is exclusively available to homeowners although renters may be considered in the future.
Which lenders are providing these loans?
Permanent TSB is the inaugural bank to offer these loans, with expectations that other retail banks such as AIB and Bank of Ireland, as well as credit unions, will follow suit in the coming months.
How do I apply for the loan?
The application process starts with the SEAI. Applicants apply through one of their One Stop Shops, where a house survey is conducted, providing an energy summary report. Once you have the report, then homeowners can approach any participating lender to submit a credit application letter.
For more information on how to make your home as cosy as possible check out the official Irish Government Press Release.
And once everything is really toasty, head back to Oriana B and grab yourself a gorgeous sofa or armchair to bask in your lovely warm home!
