How Does Green Deal Finance Work?

Via the Green Deal scheme run by the UK government, you can make your home more energy-efficient without paying a lot of money. Unlike other systems, it does not offer grants, but finance in the form of a loan. Still, this does not mean that it is financially burdening in any way. Find out more about Green Deal finance so that you can use it with confidence.

Scheme Basics

The scheme is designed to help you make home improvements which will contribute to energy efficiency. The list of eligible improvements includes wall and loft insulation, double-glazed windows, draught-proofing, underfloor heating, heating controls, boiler replacement and even solar panels. Other types of improvements may qualify as well. In order to make these improvements, you will receive a loan which is repaid under special terms and conditions.

Finance Eligibility and Amount

Any person owning or renting a property in England, Wales and Scotland can apply for Green Deal finance and qualify. There is no income assessment. You can qualify irrespective of the income which you earn. The finance is available from registered providers and lending criteria apply. The lender will take into account your credit score and history when determining your eligibility and the interest rate to be charged. Still, the requirements are lower so around 8 of every 10 applicants qualify.

The loan amount is based on the amount of money which you are expected to save on your energy bills. This will enable you to finance the most energy-efficient improvements which can be made. In general, you are free to make a personal financial contribution of any size. Similarly, you may use grants available from other schemes to pay for the improvements.

Repayment Term and Structure

Each Green Deal finance package has payments which are lower than or equal to the savings on your energy bills which you will generate as a result of the planned home improvements. In this way, you will incur no additional costs whatsoever. You will keep on paying the same bill or a slightly lower one. Once the loan is paid off, you will start generating major savings from the energy-efficient improvements.

The repayment term is typically between 10 and 25 years. You can select it in line with your financial plans. A longer term will result in smaller payments while a shorter one will help you to save on interest.

Finally, you should know that the Green Deal finance payments are automatically deducted from your energy bill. The loan stays with the property and does not go with you if you move to another house.