Perhaps you have read all the information you need on the Green Deal and decided you don’t want to pursue with taking up the offer. Well, that doesn’t mean you can’t benefit from improved energy efficiency in your home.
You can still have a Green Deal assessment to see which improvements would be best for your property, and then choose to make the upgrades without taking a Green Deal loan.
Have a look below at the alternative ways to finance home improvements, with the pros and cons for each:
Paying with your savings
Straight off, you won’t have a loan attached to your home which needs paying off. This means that any savings you make will go directly into your pocket so you’ll see the benefits instantly. With the Green Deal there’s a loan attached to your property which could cause problems if you want to sell in the future.
Of course, you’ll need the money to pay for the improvements. Depending on how much you have saved you could only afford basic upgrades, when the loan can help address your whole home.
Paying with an unsecured loan
With an unsecured loan you could find better interest rates than those with the Green Deal. Green Deal interest rates vary between 7.67% and 9% depending on the provider, for any loan of £5,000 or more. There are cheaper rates if you take a smaller loan though and the best rates are 5.1% for someone with an impeccable credit history. With an unsecured loan it’s attached to you, so this won’t prove a problem if you want to sell your home later on.
Personal loans are typically only available over a short term period, normally between one and five years. Whereas Green Deal loans can stretch to 25 years. Your repayments will be higher over a shorter time, potentially outweighing the savings you make on energy bills. Remember, a personal loan is paid back by you, not through energy savings.
Increasing your mortgage
By increasing your mortgage you can get much better interest rates, as low as 2% for those who own 60% or more of the property. A mortgage is a loan term loan and can be paid back over decades, so you won’t need to make high repayments. This is similar to the Green Deal, but with better interest rates.
By increasing your mortgage there’s no guarantee the improvements you make will add value to your home. If the market is in good shape, increasing your mortgage may be a good idea, but the moment property prices fall you could end up paying more than the home is worth. Interest rates could alter too and without a flexible mortgage you could incur additional charges.
Using a credit card
Some credit cards are available with interest rates at 0%. This gives you the chance to spread payments and once the offer has expired, transfer to another 0% deal. Some of these will last as long as 25 months. Also, if you spend between £100 and £30,000 and something goes wrong, you can claim money back under section 75 of the Consumer Credit Act.
Without paying the full balance, interest rates can increase drastically, to around 19%. On top of this, you may not receive a large enough balance for more expensive insulation measures. If you plan to transfer balances it will take a lot of effort on your part, so it’s important to remain on top of things. Make sure you know when the 0% offer ends.
Facts & Figures You’ll Love To Share
- As many as 26,000,000 homes in the UK could be eligible to receive Green Deal funding.
- Green Deal loans are paid back over a 10-25 year period with the payments taken from energy bill savings.
- Using the Government’s Green Deal you can upgrade your boiler, improve insulation and replace windows for no upfront fee.
- The Green Deal’s Golden Rule states that homeowners won’t pay back more than the savings they make on energy bills with improved efficiency.