Interest Free Green Deal Becomes A Possibility

5 November 2013

Householders could soon benefit from energy saving home improvement measures without worrying about costly loans, it has been revealed.

Dorset Energy Advice Centre (DEAC) has begun to issue unique green bonds to Green Deal providers that will allow them to offer householders 0% interest loan with which to improve the energy efficiency of their property.

The Government launched the Green Deal back in January in order to significantly reduce carbon emissions and help reform what it described as a “leaky housing stock”.

Under the scheme, householders can take out a loan to pay for energy efficient home improvements. The list of measures available through the scheme totals more than 40 different improvements, with Cavity Wall Insulation, Solid Wall Insulation, and Loft Insulation all included.

By better insulating homes, the Government hopes to curb fuel poverty by bringing the fuel bills down.

A Green Deal loan is repaid via a property’s electricity bill at a fixed rate of interest. Uptake has been slow however, as one of the problems with the scheme is the high interest rate. Those taking out a loan can expect to pay between 7.9% and 10.6% depending on the amount borrowed and the duration of the loan.

The new green bond on offer from the DEAC now potentially offers householders a less expensive option for making their homes more energy efficient.

According to GreenWise, the Warmer Group – a Green Deal provider based in East Dorset – has already taken out a bond and is reportedly testing the scheme before rolling it out across the country.

Any other information regarding the bond has yet to be disclosed.

The DEAC is also offering what it refers to as a “Greener Loan” alongside the bond. As with the Green Deal loan, this loan can be used by householders to make energy saving improvements on their home.

Acceptable measures that can be paid for using the loan include home insulation (Loft Insulation, Cavity Wall Insulation, Solid Wall Insulation) as well as the installation of efficient boilers.

The greener loan is reported to be charged at a flat interest rate of 4.92% which would make it cheaper than the loan provided by the Green Deal Finance Company, which offers a 6.96% flat rate.

It’s still early days for both the DEAC bond and its “greener loan” but with the company looking to find alternative and cheaper methods for householders to save energy, it may only be a matter of time before energy efficiency becomes even more affordable.

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