If you're considering retrofitting your home you'll need to figure how to finance it first. In this article we'll help you do just that.
The Government wants everyone to use less energy to help meet our climate targets, but reducing your energy consumption is easier said than done, especially considering most of the country is still working from home.
That’s why retrofitting has become such a hot topic. Improving your home’s energy efficiency not only helps you to reduce your carbon footprint, it also means you can save big on your energy bills, especially if you live in an older, poorly insulated home.
Figures from the Central Statistics Office show that the Building Energy Rating (BER) of domestic homes constructed during the 70s, all the way up to the early 00s, have a C1 energy rating or lower. This is far below the A rating all new homes today must have.
And while it’s not always as expensive as you might think, some retrofit measures can cost a fair few bob. However the good news is that there are a number of financing options available should you be considering making one improvement or maybe more.
1. Get a grant from the SEAI
The Sustainable Energy Authority of Ireland (SEAI) offers homeowners considering a retrofit a range of grants. They are as follows:
- Insulation grant
- Solar Water Heating Grant / Solar Thermal
- Solar Electricity Grant / Solar PV
- Heating controls grant
- Heat pump grant
Some of the most straightforward grants on offer from the SEAI are those paid toward the cost of internal and/or external insulation.
With grants available from €400 for attic and cavity wall insulation, all the way up to €6,000 for external wall insulation, there are plenty of options to choose from. Naturally, the grant amount you can apply for will depend on the work being done and the type of house you live in.
The energy authority has said in the past that properly insulated walls can save a home up to €600 per year on heating bills, which is no small amount.
An upcoming increase to the carbon tax in May is set to make heating bills even more expensive, with the increase meaning around €79 in total of a home's annual natural gas bill will be made up by the carbon tax alone.
But by making sure your home is well insulated it could help to offset any tax increase, not to mention lead to even bigger savings down the line.
Another grant available from the SEAI is for the installation of solar electricity panels, or solar PV cells, commonly seen on the roofs of houses passed by on your Sunday drive no doubt.
Different to solar thermal panels, which are designed to heat water only, solar PV modules generate electricity for use around the home.
Grants available start from €900 per kWp up to a maximum of 2kWp, so €1,800 for 2kWp solar panels. This equates to around six to seven panels - enough for the average sized home.
If you’re looking to install anything over 2kWp you’ll need to install a battery, for which you can receive a grant of €600.
You'll also receive €300 for every additional kWp up to 4kWp if you get a battery. With a battery storage unit, any excess electricity generated during the day by your solar panels can be stored for use later.
For example, a customer who wants 3kWp will receive a grant of €2,100 in total, plus the €600 for the battery.
By far the greatest positive of having solar panels is the reduction in the amount of electricity you'll need to purchase from your supplier, which has a direct impact on the cost of your bills each year.
The SEAI estimates savings on your domestic electricity bill to be approximately €200-€300 per year with a solar PV system installed.
While retrofitting is clearly a long-term investment with a cash investment required at the start, by insulating your walls and having solar panels installed you could save close to €1,000 on the cost of your energy in year one - not to be sniffed at!
You can find out more about each grant with our in-depth piece on the full range of grants available.
2. Take out a green loan with AIB, BOI, or An Post
The next option available to consumers considering a retrofit, big or small, is to take out what’s now commonly known as a green loan, which often come with attractive interest rates.
Customers who go for a green home loan must use it for a specific purpose though, such as for wall, attic or floor insulation, boiler upgrades and heating controls, right up to home charger units for Electric Vehicles. Each lender may have different requirements so make sure to check eligibility criteria before applying.
At the moment, AIB, Bank of Ireland, and An Post all have competitive green loan offerings for customers who are looking to retrofit.
To begin with, let’s take a look at AIB’s green loan.
AIB - Green personal loan
AIB only recently introduced its new green personal loan. Customers who apply can avail of AIB’s new green rate of 6.25% (6.40% APR), the lowest personal loan rate currently available from the bank. For context, its current standard rate for personal loans is 8.95% so this is significantly lower.
With this loan it’s possible to borrow between €3,000 and €30,000 for up to five years and you’ll need to spend at least 50% of the loan on a green initiative.
AIB doesn’t charge penalties should you decide to make extra repayments or if you’d like to repay your loan earlier, which can be a real help.
The only catch is that to be eligible for this loan customers must already be a customer of the bank and must apply through the AIB mobile app.
If you’re not eligible for this loan with AIB make sure to check out the competition!
An Post - Green home improvement loan
Customers can also retrofit their homes with a green loan from An Post. It's possible to borrow from €5,000 to €75,000 and for a term of up to 10 years.
Rates from An Post start from as low as 4.9% APR. However, customers must be availing of an energy efficiency grant from the SEAI in order to apply.
Loan applicant's homes must have been built prior to 2006. They must also submit an SEAI 'Declaration of Works' document with the loan application.
With An Post the interest rate you pay is determined by your loan amount. Take a look at the table below for further details.
Fixed interest rate
€5,000 - €9,999
9.1% - 12.2%
9.5% - 12.9%
€10,000 - €19,999
7.3% - 11.3%
7.5% - 11.9%
4.8% - 10.9%
4.9% - 11.5%
Bank of Ireland - Green home improvement loan
With Bank of Ireland’s green home improvement loan customers can obtain a variable rate of 6.50% APR. Loan amounts start from €2,000 and go all the way up to €65,000.
Its loan term is from one to seven years.
Some of the advantages of choosing BOI’s green loan include flexible repayment options, the ability to defer the first 3 months’ repayments, as well as not needing to hold any savings against your loan.
Similar to the other green loans available above, the work being undertaken must include a retrofitting activity such as installation of solar panels, insulation of any kind, and so on.
3. Chat to your energy supplier
Some suppliers like to reward customers for being increasingly energy efficient, and when it comes to saving money on your energy bills, every little bit helps.
One example of a worthwhile scheme is currently available for customers of Electric Ireland. The leading energy supplier offers energy credits to customers when they have completed certain energy efficiency measures in their home.
Combined with an energy efficiency grant these energy credits help to further reduce the overall cost of installation.
The ‘Energy Efficiency Incentive Credits’ are available for a range of upgrades including insulation, boiler control measures, as well as the installation of heat pumps.
Customers in both apartments and houses can apply for money off their bills. Certain homes with a heat pump installed for example may be eligible for a credit of over €1,500 - so no small amount!
Here’s how Electric Ireland’s credit incentive works for those looking to take advantage:
- Contact an Electric Ireland Energy Efficiency Partner about installing energy saving measures in your home.
- The Partner will assess the job and explain how much credit the job entitles you off your next Electric Ireland bill.
- Once the work is carried out and paid in full, your details will be submitted to Electric Ireland.
- You will receive a confirmation email and the credit will be applied to your bill within 10 days.
It’s as simple as that!
4. Chat to your local Credit Union
The Credit Union, Energia and Irish-owned retrofit company House2Home have all recently teamed up to launch the CU Greener Homes Scheme, a one-stop shop for those looking to finance a retrofit.
Grants of up to 40% are available as part of the scheme and are discounted upfront by House2Home.
The SEAI provides a grant of 35% for homeowners who complete a deep retrofit project. The remaining 5% is provided as additional support by Energia while participating Credit Unions are offering discounted loan rates from as low as 4.9% APR depending on the size of the work you're getting done.
There are also a number of grants available for shallow retrofits. So whether you are considering just a new boiler or a deep retrofit, the CU Greener Homes Scheme can help.
5. Consider using your savings
Last but not least, and it may come as obvious, but another financing option when it comes to a retrofit is using your own savings that you’ve built up.
As it stands there’s a record €127bn or so on deposit with banks and financial institutions, with a vast amount of that potentially being considered for home improvements. In fact recent research conducted by iReach Insights to mark the launch of the Credit Union's Greener Homes scheme, found that 56% of Irish households are considering home improvements due to more time spent at home due to the Covid pandemic. So why not home energy improvements?
While we’re in no way suggesting that you use your rainy day fund to finance a deep retrofit of your home, if you have built up excess savings over the past year or so, a retrofit is a good use for them.
And remember, with interest rates at an all time low, the savings you make through the retrofit are likely to be far larger than any money you'll earn with your savings.
Weigh up your options
Each person’s circumstances are different so weighing up your options before making a decision on your financing options is important. Asking yourself important questions such as 'after what time do I want to see a return on my spend?' and 'what can I afford?', should all be part of the process.
However, for some people, it may be better to pay off outstanding debt rather than take on another loan to make savings on your energy bills with a retrofit, for example.
And remember, depending on the finances available to you, you can always consider a partial, 'shallow' retrofit over a more extensive one and save for the other works in the meantime, as any measure, no matter how small, will help to reduce your bills and lower your carbon footprint.
Get in touch!
If you have any questions for us regarding your financing options for retrofitting and energy efficiency in general why not get in touch in the comments below?