New scheme offers up to €75,000 retrofit loans at low cost

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Environment minister Eamon Ryan, finance minister Michael McGrath, and junior finance minister Neale Richmond launched the Home Energy Upgrade Loan Scheme on 24 April. The scheme is the first of its kind for both Ireland and the European Investment Bank (EIB) Group and will play a crucial role in helping homeowners to invest in energy efficiency, making their homes warmer, healthier and cheaper to run.

The government of Ireland scheme is delivered by the Strategic Banking Corporation of Ireland (SBCI) on behalf of the Department of the Environment, Climate and Communications, and supported by the Sustainable Energy Authority of Ireland (SEAI) and the EIB Group.

PTSB is the first financial institution to offer loans to homeowners under the scheme, with rates from 3.55 per cent. AIB, Bank of Ireland, Avant Money and seven credit unions from the Irish League of Credit Unions (Clonmel, Connect, First South, Listowel, Naomh Breandan, North Midlands and Progressive) are finalising the approval process and legal requirements to provide the scheme and are expected to commence offering loans in the coming weeks.

With more lenders and increased competition in the market, it is expected that rates will be extremely competitive, offering consumers more choice and value. Rates will be significantly lower than those currently on the market because of the combination of an EIB Group loan guarantee and a government- funded interest rate subsidy. The loans will help lower the financial barriers encountered by homeowners, making home energy upgrades more accessible and affordable.

At the moment, other personal loan rates can be up to 14 per cent interest. As an additional bonus, households could also qualify for a lower cost green mortgage in the future after they use their low cost loan to improve their BER score up to the required level.

This innovative scheme shows how the government, financial institutions and the retrofit sector are working together to deliver climate action that works for people and planet.

The loans can be used by homeowners who want to undertake a deep retrofit involving several energy upgrades at the same time or to carry out one or two upgrades that will significantly improve the energy performance of the home. In order to avail of the low cost loans, the upgrade projects must be supported by an SEAI grant and be projected to achieve a minimum 20 per cent improvement in the energy performance (BER) of the building.

Homeowners will apply for the loans through the participating finance providers. There will be no requirement for the loan to be secured against the property being upgraded (as is the case with a mortgage). Once approved, the loans can be drawn before works begin. This gives certainty to homeowners that they have the funds for the planned energy upgrades as well as any up-front costs or milestone payments. This is often identified by homeowners as a key barrier to upgrading their homes.

Those most at risk of energy poverty can continue to avail of fully-funded energy upgrades under the Warmer Homes Scheme. The availability of low cost loans will make it easier for those above the eligibility threshold to upgrade their homes.

Speaking at the launch, Minister Ryan said: “This innovative scheme shows how the government, financial institutions and the retrofit sector are working together to deliver climate action that works for people and planet. We have designed the loans with the needs of homeowners in mind. Access will be simple and speedy with an emphasis on reducing the workload for homeowners accessing both loans and grants. We also anticipate that with greater competition on the market, loan rates will also become more competitive, giving people more choice and value."

Kevin McKeon, head of the EIB Group representation in Ireland, said the scheme “gives homeowners the tools they need to make a difference in the battle against climate change, putting power in the hands of individuals. This visionary initiative sets a precedent unblocking climate action in Ireland and paves the way for other European countries to follow Ireland’s lead in the fight against climate change.”

With the scheme facilitating unsecured, 10- year, low cost loans, SBCI CEO June Butler emphasized that the “significant discount to current personal loan rates” would make meaningful upgrades more affordable. “It is designed to address market feedback that the absence of such a product is a barrier for some homeowners to carrying out deep energy retrofits in their homes,” said Butler.

SEAI CEO William Walsh echoed the point that high upfront costs of retrofit can be a deterrent, and added that the loans would be complemented by other measures. “This new loan scheme from SBCI will work in parallel with SEAI’s home energy grant programmes, making it easier for homeowners to begin their retrofit journey and move away from fossil fuels.”

PTSB retail banking director Patrick Farrell said: “PTSB is delighted to partner with SBCI to offer customers low cost loans to upgrade the energy efficiency of their home. This partnership allows us to provide competitive funding to support customers and help increase the volume of home retrofitting across the country. Our recent consumer research shows that while 1 in 5 (20 per cent) are prepared to retrofit their homes at their own expense, the intention more than trebles to 65 per cent if assistance is made available, so we expect this to be a welcome support among consumers.”

Further details on the eligibility criteria and other operational aspects of the scheme are available on both the SBCI and SEAI websites