How homeowners can use green loans to boost comfort and cut costs

Green loans – sometimes called energy home loans – are a specialised type of finance designed to encourage homeowners to improve the environmental performance of their property.

While they work in a similar way to regular mortgages, they are typically offered at lower interest rates or with added incentives when the money is used for eco-friendly upgrades.

How green loans differ from standard loans

The main distinction is purpose. A standard mortgage can be used for any property purchase or refinancing. A green loan, by contrast, is conditional on the borrower spending the funds on eligible improvements. These may include:

• Installing solar panels or battery storage systems.
• Upgrading insulation or double-glazing to reduce heat loss.
• Switching to energy-efficient heating or cooling systems.
• Adding water-saving technologies such as rainwater tanks.

Because the lender knows the money is being invested in sustainability, they may offer a lower rate, fee waivers or cashback incentives.

How common are they in New Zealand?

Green loans are not nearly as widespread as standard mortgages, but several major banks and non-bank lenders now offer them.

As awareness of energy efficiency grows, and as households face rising power costs, demand for these loans is expected to increase.

New Zealand’s focus on emissions reduction has also prompted greater support for homeowners who want to future-proof their properties.

How they may be used by renovators

For homeowners planning renovations, a green loan can provide affordable funding while improving comfort and reducing long-term running costs.

For example, instead of taking a standard top-up loan, a family upgrading their insulation and installing solar could secure a discounted rate through a green lending product. Over time, those energy savings can offset some of the loan cost, while also boosting the property’s appeal to future buyers.

If you'd like more information about how green loans work, or to explore whether a green loan could help you fund eco-friendly upgrades to your property, please get in touch.