If you are considering upgrading your home to make it more energy efficient, you may already know it’s a cost-effective way to save money and help the environment. But how can you pay for it? Here are a few options.
Did you know financing is often available for energy-efficiency upgrades to residential properties? It’s true! Energy efficiency is more than just a money-saver. It’s an investment in the overall value of your property. If you want to enjoy those savings for years to come, taking advantage of energy-efficiency financing allows you to spread your cost over time so that it won’t burden you or your family. In this guide, we’ll cover the most common types of financing and explain how each one works so you can find the right option for your home.
Options For Financing Energy-Efficiency Upgrades
There are several options for financing energy-efficiency upgrades. Some are better than others, and some are more expensive than others. But the best way to determine which is right for you is to research!
1. Home Improvement Loans and Mortgages
Home improvement loans can be used to finance energy-efficiency upgrades. These loans are available from banks, credit unions, and other lenders. They’re available for both new and existing homes.
If you’re considering an energy-efficient upgrade but don’t have the cash, this option may be right for you!
2. Home Equity Loans and Lines of Credit
Home equity loans and home equity lines of credit are two options for financing energy-efficiency upgrades. Home equity loans are a type of second mortgage that allows you to borrow money against the value of your home, usually at an adjustable rate tied to an index like LIBOR. HELOCs are similar in some ways, but unlike traditional mortgages, they allow borrowers flexibility by not requiring large lump sum deposits upfront before closing on the purchase date. Homeowners should consider their ability to repay principal and interest before taking out such a loan.
3. Variety Of Loans
You can choose from a variety of types of loans, including:
- Home improvement loans. These are typically used for repairs or improvements to your home’s interior, such as adding insulation or installing new windows. They may also be used for exterior projects like painting or landscaping.
- Energy-efficient appliance loans. These loans help you upgrade to more energy-efficient appliances such as refrigerators and washing machines, which use less electricity than their older counterparts do and therefore cost less money to run over time.
- Solar panel, installation financing options, vary widely depending on the installer offering them; some offer fixed rates while others offer variable ones (where interest rates change according to market conditions).
4. On-Bill Financing
On-bill financing is a way to pay for energy efficiency upgrades without coming up with all the money at once. It is based on how much electricity you use and not on how much money is owed overall and can be used even if you have very little equity in your home or business property. On-bill repayment plans typically start at around $100 per month but can go up depending on what kind of work needs to be done and whether additional incentives are available.
5. Property-Assessed Clean Energy (PACE) Loans
PACE loans are a local option to finance energy efficiency upgrades, repaid through a special assessment on the property tax bill instead of monthly payments. Contact your municipality to find out if they offer this option and how much they charge.
Conclusion
There are many options for financing energy-efficiency upgrades, and they can be used to pay for everything from new windows and insulation to solar panels and furnaces. If you’re looking for an affordable way to make your home more efficient, these loans can help.
