Make Your Home Greener with 0% Interest Loans for Green Home Improvements

3rd December 2023

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In more recent years, homeowners have recognised the importance of creating sustainable, eco-friendly living spaces. They understand how green properties and energy-efficient homes not only contribute to a healthier environment, but, they also lead to long-term savings on energy bills. However, the cost of implementing green home improvements can be a significant barrier to many homeowners. Understanding this, the Nationwide Building Society has reduced the interest rate on Green Additional Borrowing to 0%. They are offering 5,000 existing mortgage customers the opportunity to borrow up to £15,000 for green home improvements, without paying interest.

Understanding Nationwide’s new 0% Green Additional Borrowing mortgage

Nationwide Building Society have introduced a significant measure to support mortgage members in enhancing their homes’ energy efficiency. They reduced interest rates on their Green Additional Borrowing products to 0%. This move is part of their efforts to contribute to the UK’s goal of reaching zero emissions by 2050, especially since residential properties account for 16% of the country’s emissions.

Henry Jordan, Director of Home at Nationwide Building Society states, “Residential properties are one of the biggest causes of emissions and there is a need for more to be done by government and business to encourage households to act. A key barrier to making homes more energy efficient is not only the upfront costs associated with retrofitting but also the payback period of making such changes.”

Starting from June 1 2023, up to 5,000 households with a Nationwide mortgage have access to these new 0% Green Additional Borrowing products. Borrowers can secure loans ranging from £5,000 to £15,000, with a maximum loan-to-value (LTV) of 90% and choose between a 2 or 5-year product term.

While Nationwide’s direct control over emissions on the properties they lend on is limited, they hope to inspire positive change by encouraging members to invest in green home improvements through this interest-free offering. For instance, borrowers taking the maximum £15,000 loan over 5 years would save £25.50 per month, totalling £1,530 over the loan’s full term, compared to the previous interest rate of 3.89%.

Eligibility and Application Process

The 0% Green Additional Borrowing mortgage offers an excellent opportunity for homeowners to create their ideal green home. To qualify, the entire loan amount must be dedicated to energy efficient home improvements. To be eligible, applicants must be existing Nationwide mortgage members and your existing mortgage, combined with the additional borrowing, must not exceed 90% value of your home. Additionally, the term of the additional borrowing cannot surpass the mortgage term of the existing main mortgage account, and there is a limit of one Green Additional Borrowing mortgage per property. It is worthwhile noting, while the 0% interest rate is applicable during the fixed deal period, it does shift to the variable Standard Mortgage Rate (SMR) after that time, if any outstanding balance remains.

Nationwide’s new Green Additional Borrowing home loan is accessible through their mortgage advisors and brokers, aiming to make it more convenient for members to pursue eco-friendly upgrades. If you are unsure on how to proceed or have any questions, our dedicated team of specialists are available anytime.

Types of Green Home Improvements:

Whilst it is essential to allocate the entire Green Additional Borrowing mortgage to eligible green home improvements, you have the flexibility to invest in a wide range of energy efficient measures. Some of the most popular options include:

1. Solar panels: installing solar panels is one of the most common green home improvement projects homeowners undertake. How does it work? A solar PV panel consists of many cells made from layers of semi-conducting material, most commonly silicon. When light shines on this material, a flow of electricity is created. The cells don’t need direct sunlight to work and can even work on cloudy days. Excess energy created can either be sold to the electricity grid or stored using a battery or hot water tank for your own use later. The average cost of solar panels in the UK is £7,860 for a 3 bedroom house. A smaller house might cost you £4,716 solar panel system, while a larger house pays, on average, £11,005 for solar panels.
2. Cavity wall insulation: cavity walls can be insulated by injecting insulation material into the cavity from the outside. The cavity is located between the inner and outer brickwork of the property. Cavity wall insulation stores the heat within the inner walls, bouncing it back into the room and holding it for longer. It also works in reverse by keeping your house cooler in the summer months. For example, good cavity wall insulation can cut your heat loss by up to 33%, and your energy bills by up to £520 a year according to EDF Energy.
3. Loft insulation: installing loft insulation can have a huge and immediate impact on the warmth of your home and the cost of heating it. In an uninsulated home, around 25% of the heat escapes through the roof. If there’s easy access and no damp or condensation issues, installing loft insulation should be a quick and straightforward way to increase the energy efficiency of your home. According to Money Supermarket, “loft insulation can save you hundreds of pounds in heating bills a year – and it might help save the planet too. About a quarter of all the heat lost from a house escapes through the roof. Loft insulation is like a woolly hat for your house, keeping the warm air in so you need less energy for heating.”

Advantages of 0% Interest Loans for Green Home Improvements

1. Affordability: the absence of interest charges makes these loans highly affordable, enabling homeowners to pursue green upgrades without straining their finances. Some of those upgrades include swapping traditional bulbs for LEDs, installing water saving taps, and draught proofing.

Draught proofing blocks any gaps that let cold air in and warm air out, which lowers your bills and carbon footprint. One of the easiest ways to achieve this is by purchasing a chimney balloon. The chimney balloon is designed to fill the whole chimney void. You are meant to leave it in place for long periods of time. It can be taken out and reinserted, but, it needs to be handled carefully to ensure it remains intact. It also takes some additional care to inflate and deflate it properly. So, it does come with some additional effort, but, if it suits your home then this is a viable option to consider. Prices start at £20, and you do see an impact on your energy bills.

2. Positive environmental impact: by investing in eco-friendly improvements, you actively contribute to reducing your carbon footprint and promoting sustainable living. One way to do this is to use eco-friendly paint. Not all paints are created equal. There are many brands on the market offering eco-friendly alternatives which exclude volatile organic compounds (VOCs). That means the paint is healthier for you and your family, and the environment. The same applies to wallpaper. If you look for Forest Stewardship Council (FSC) certified wallpaper, then you are identifying wallpaper made from well-managed forests or recyclable materials. Have a look at your options by reading the labels, before purchasing anything.
3. Increased home value: green home improvements can increase the value of your property, making it a more attractive investment in the long run. According to the Department of Energy and Climate Change (DECC), state that green home improvements, “could increase its value by 14 per cent on average – and up to 38 per cent in some parts of England.”

One way to do this, and a way to get the entire family involved, is by planting a green roof to your shed, bike storage or garage. It benefits wildlife, improves air quality, helps rainwater run-off, and improves greenery growth and the lifespan of your roof.

4. Energy savings: energy-efficient upgrades result in lower utility bills, helping you save money and recoup the initial investment over time. Some ideas are to change light bulbs to LED bulbs, as mentioned above. Furthermore, think about changing your appliances to energy efficient appliances. Which reports that using the most efficient appliances could save homeowners £336 a year. Also, This is Money has reported that switching from a “C-rated fridge freezer to an A+++ rated one can save homeowners £113 a year.”

In conclusion, making your home greener with 0% interest loans for green home improvements is a win-win situation. By taking advantage of these financial programmes, homeowners can not only reduce their carbon footprint and lower energy bills but also contribute to a more sustainable future. Embracing the principles of green properties and energy efficient homes benefits both the environment and your finances.