Installing a solar power system in your home isn’t just great for the environment; it’s also good for your house value, your utility bills and for your mortgage pay-off.
It’s also possible that mortgage lenders may offer buyers a combined home loan and solar system loan when they apply for finance. By installing solar straight away, borrowers could save hundreds, if not thousands, of dollars each year. The money saved on bills – Australia’s non-renewable energy costs are continuing to rise – could be used on mortgage over-payments even if buyers don’t have the home-solar bundle option.
Sustainable investment is attractive to lenders
The high cost of power and the low interest rates makes great sense for lenders and investors to look at solar. Not only will borrowers be less likely to default on payments or get into difficulty, but the long lifespan of PV systems makes homes with them easier to sell down the line.
The average cost (with a government subsidy) of installing a basic 3kW system in $4,000 and a 10kW system is $16,000. Battery systems cost from $3,600 and $12,000, although these costs are likely to fall in the coming years.
It’s costly upfront, then, but homeowners will save substantial amounts of money by investing in solar, even if it means extending their mortgage initially.
An average example
A household with a $600,000 mortgage, switching from a regular electricity provider to a PV system would save around $8 per day on their electricity (including the power they sell back to the grid). When the extra interest generated by the mortgage extension needed to buy the PV system is factored in, this household is around $1,800 better off each year.
Lenders need to catch on
Ideally, lenders need to realise that buyers looking to borrow more so they can install solar are actually canny investors. A PV system isn’t a hot tub or a pool, it’s of long-term financial benefit and if energy prices carry on rising, these benefits will increase. This means that lenders should offer lower interest rates or larger amounts to such home buyers to help them to get started.