THE GOVERNMENT HAS launched a new low-interest loan scheme aimed at helping more households to improve their home’s energy rating in order to lower energy bills and emissions.

The €500 million scheme has been anticipated by homeowners who want to make upgrades on their home like retrofitting or solar power.

Here’s your rundown on how the loan works, who is eligible, and how applications can be made. 

What is the loan and how much is it worth?

The main difference between the new home energy upgrade loan and other loans is the interest rate. Lenders will need to provide rates that are lower than they otherwise would be for this kind of borrowing. Permanent TSB, the first bank to join the scheme, has set its rate at 3.55%.

The Department of Environment has said that most green home improvement loan interest rates are currently around 6% or 7%, while other personal loan rates can reach up to 14%.

Borrowers will be able to take out loans from €5,000 to €75,000 under the scheme with terms up to ten years.

The loans will be given on an unsecured basis (which means the borrower does not need to put up a collateral asset). Speaking at a press conference this afternoon, CEO of the Strategic Banking Corporation of Ireland June Butler said this would make it “much easier for homeowners” to access the loans.

What can the loans be used for?

The loan must be used by homeowners for some type of home energy upgrade works that qualify for a home energy grant from the Sustainable Energy Authority of Ireland (SEAI).

The list of these works can be found on the SEAI website and includes insulation, heat pumps, and solar power.

Additionally, the works must be expected to improve the home’s energy performance by at least 20%, which is measured using the Building Energy Rating (BER). 

Up to 25% of the value of the loan can actually be spent on works not related to energy efficiency, like if other home improvement works are happening at the same time as the energy upgrade, but it can’t be used for any form of installation of fossil fuel boilers.

It’s hoped that the home energy upgrade works carried out through the loans will reduce homeowners’ energy bills, help the climate by reducing greenhouse gas emissions and improve energy efficiency.

What about renters?

The loan is only being offered to applicants who own their home.

Minister for Climate Eamon Ryan said this afternoon that the government will need to come back with further measures for renters.

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“That’s a further next step we have to take in terms of where we put obligations on the rental sector to make sure they’re not left out.”

What lenders are offering the loans?

Permanent TSB is the first bank to sign up to provide the loans. Neale Richmond, the Minister of State for Financial Services, said he expects Ireland’s other retail banks – AIB and Bank of Ireland – and credit unions to join up in the coming months.

How do I apply for the loan?

June Butler of the Strategic Banking Corporation of Ireland outlined this afternoon that the process to apply for the loan starts with the SEAI.

“You apply through one of their One Stop Shops and you’ll get a survey done on your house which will give you a whole energy summary report,” Butler said.

“As soon as you have that, you take it to any of the participating lenders and do the credit application letter. Those times are quite fast, so for the majority of lenders the turnaround time to then be approved for the loan would be 24 to 48 hours.”