Green Loans Explained

What is a green loan?

Low-rate lending for energy-efficient upgrades

Most New Zealand lenders offer green loans as a mortgage top-up — a separate portion of lending added to your existing home loan, specifically for energy-efficient home improvements or clean transport. The key benefit is the interest rate: some lenders offer rates as low as 0% to 1% for these upgrades, making them one of the most cost-effective ways to borrow money available to homeowners. They are available for a range of improvements — from solar panels and heat pumps through to electric vehicles and EV chargers. You need an existing home loan with that lender to access most green loan products.

What can green loans be used for?

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Solar panels

Rooftop solar is one of the most popular green loan uses. The upfront cost has come down significantly in recent years, and with a low-rate loan the payback period shortens considerably. Lenders typically require installation by a member of the Sustainable Energy Association of New Zealand (SEANZ).

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Heat pumps and clean heating

Green loans can cover the cost of a heat pump, wood pellet burner, or other clean heating system. Heat pumps are one of the most efficient ways to heat a home — and replacing an older gas or electric heater can reduce your power bill significantly over time.

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Insulation and double glazing

Wall insulation, ceiling insulation, underfloor insulation, and double glazing all qualify under most green loan schemes. Improving your home's thermal performance makes it warmer and drier — and reduces the energy needed to heat it, lowering your bills year-round.

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EV chargers and smart home systems

Home EV chargers, smart chargers, induction cooktops, ventilation systems, and rainwater tanks can all be included depending on the lender. These smaller upgrades can often be bundled into the one loan alongside a larger project.

Electric vehicles

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Buying an electric or hybrid vehicle

Green loans can cover EV and plug-in hybrid purchases

Several lenders in New Zealand now include electric vehicles and plug-in hybrid vehicles within their green loan products. This means you could purchase an EV using a mortgage top-up at a significantly lower interest rate than a standard car loan or personal loan — making the switch to electric considerably more affordable. Some lenders lend up to $80,000 for EV and home energy upgrades combined. The loan is typically structured over a short term of 3 years, keeping your interest cost low and ensuring you are not paying off the vehicle over the full life of your mortgage.

Typical rate

0% – 1%

Typical term

3 – 5 years

Max lending

Up to $80k

How green loans work

How it is structured

A green loan is added as a separate portion on top of your existing home loan — not a standalone product. It sits alongside your main mortgage with its own rate and term. You need to already have your home loan with the lender offering the green loan, or be prepared to move your mortgage across to access it.

Interest rates

Rates range from 0% to around 1% fixed for the loan term — significantly lower than standard mortgage rates, personal loan rates, or credit card rates. Some lenders offer 0% for up to 5 years. Others offer 1% for a 3-year term. After the term ends, the balance typically reverts to the lender's standard floating rate, so it is worth planning to have it repaid within the special rate period.

Loan amounts

Most lenders offer between $50,000 and $80,000 for green improvements. The minimum is typically a few thousand dollars. The amount you can borrow depends on the lender, the project, and your existing equity in the property.

Equity required

You need sufficient equity in your property after the top-up — typically at least 20% for an owner-occupied home. The green loan top-up is added to your total mortgage, so your LVR after the increase still needs to be within the lender's requirements.

Evidence required

Lenders typically require a quote or invoice from a certified installer before releasing the funds. For solar, most require the installer to be a member of SEANZ. For an EV, a purchase agreement from a registered motor vehicle dealer. Funds are usually released once you can confirm the installation date or purchase.

Changing banks

Green loan products are lender-specific — you need to have your home loan with that bank to access their offer. If your current lender does not have a competitive green loan, it may be worth reviewing your mortgage at refix to move across. I can help you compare what is available and whether a switch makes sense for your overall situation.

Why it is worth doing

At 0–1% interest, green loans are among the cheapest money you can access as a homeowner. Compare that to a personal loan at 10–15%, or a credit card at 20%+. If you have been thinking about upgrading your heating, adding solar, or buying an EV, a green loan is almost always a better way to fund it than any other form of borrowing.

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Significantly lower interest

0–1% versus 10%+ for a personal loan or car finance. Over a 3–5 year term on $50,000, the interest saving is substantial — often thousands of dollars compared to other borrowing options.

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Lower power bills

Many green upgrades — solar, heat pumps, insulation — reduce your ongoing energy costs. The monthly saving on your power bill can offset a significant portion of the loan repayment, making the net cost even lower.

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A warmer, healthier home

Insulation, double glazing, and efficient heating improve the comfort and health outcomes of your home. A warmer, drier home is better for your family and can also be more attractive to buyers when it comes time to sell.

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Reduced environmental impact

Moving to solar, heat pumps, and EVs reduces your reliance on fossil fuels and lowers your household's carbon footprint. Many New Zealanders find this a meaningful reason to make the switch — and the financial incentives make it an easy decision.

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Not sure if you are eligible or which lender has the best deal? Green loan products vary between lenders — the rate, maximum amount, eligible items, and term all differ. I can compare what is available across my full panel of lenders and help you work out the best option for your situation — including whether it makes sense to consider switching banks to access a better green loan at your next refix.

Thinking about a green upgrade? Get in touch and I can tell you exactly what is available, how much you could borrow, and how to structure it alongside your existing mortgage.

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This guide is for general information purposes only and does not constitute financial advice. Green loan products, rates, and eligibility criteria vary between lenders and may change. Government grant schemes are subject to their own eligibility requirements. For advice tailored to your situation, get in touch with Briana McDonagh.