Clean Energy Home Loan Renovate: 5-Year Variable 5.38% pa (CR 6.14%) for Eligible Borrowers @ Bank Australia

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Clean Energy Home Loan Renovate: 5-Year Variable 5.38% pa (CR 6.14%) for Eligible Borrowers @ Bank Australia
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drillvoice on 03/01/2025 - 14:54 bankaust.com.au (1798 clicks)
Last edited 03/01/2025 - 15:04 by 1 other user

I was researching and I came across this new home loan offering from Bank Australia. It is part of a government program to offer low-cost finance to encourage people to improve the energy performance of their homes. In this case, if you are doing a new-build or changing an existing property and it meets certain criteria, you can access lower interest rates. From what I can tell these are the lowest rates currently available anywhere publicly.

I'm focusing on the renovation of existing property:

Eligibility requirements:

  1. The property must be all-electric, no gas.
  2. In the past 18 months you have done 3 activities from a list of retrofits including: solar, battery, induction cooktop, ceiling fans, EV charger, electric hot water, insulation, reverse cycle AC, double-glazed windows. Check out the link for all the details. Alternatively you can get a scorecard assessment and demonstrate you have improved the performance of your property.

If you can tick those boxes you are on track for one of the lowest rates going.

Note that most of these measures are worth doing on their own! Solar definitely going to save you money, ceiling fans &/or reverse cycle AC great for cooling and heating, insulation a massive win. So you really win twice: you get the benefit of the upgrade, plus also the benefit of the lower interest rate.

I'm sadly ineligible as I did many of the upgrades more than 18 months ago.

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Comments

  • WhyAmICommenting on 03/01/2025 - 15:22
    +2

    No gas :(

    • RolloTomasi on 03/01/2025 - 17:09
      +15

      Induction will be the way forward, and I say that as somebody who owns a commercial kitchen.

      The main issue is power. Once solar+battery comes down in price, I can't see a need for gas at all.

      • WhyAmICommenting on 03/01/2025 - 17:11
        +2

        Agree long term. But we have instant gas hot water (previously gas heated storage) and installed a gas hob before health concerns were well known - although our house probably leaks air like a sieve so hopefully not doing us much harm.

        Very expensive to change both of those so need to wait for something to die.

        • ely on 07/01/2025 - 16:40

          Not sure what your definition of very expensive is, but with the various rebates and depending on the amount of electrical work required it's probably not that expensive. The rebates in VIC put a heat pump hot water replacement around $1000 out of pocket. Induction cooktops are $1k-$1500 (with a $140 rebate in VIC), but the electrical work might set you back quite a bit, depending.

          I recently saw this loan as well, and am in the process of figuring out all the pricing. That rate will save me > $8k/year in interest so it'll pay itself off pretty goddamn fast.

      • cerealsmok3r on 03/01/2025 - 17:13
        -1

        The current interim measure before the transition is renewable gas. The problem with that is that it’s not available in large quantities so won’t be offered to residential

        • floorpie on 18/01/2025 - 16:58

          Renewable gas is not a practical solution. It cannot be made in large enough quantities and only exists as a greenwashing device for gas companies.

      • 1st-Amendment on 03/01/2025 - 17:36
        -8

        Induction will be the way forward, and I say that as somebody who owns a commercial kitchen

        You don't need a 'commercial kitchen' to know that induction is shit compared to gas. I've had both, gas is better.

        • drillvoice on 03/01/2025 - 18:36
          +7

          What makes you think gas is better? I've also used gas and induction. I find induction much easier to clean and quicker and more responsive. Cost-wise cooking is so small it's not a big deal, although if gas cooking is your only gas connection then the connection charges certainly add up.

          • 1st-Amendment on 04/01/2025 - 09:02
            -1

            @drillvoice:

            I find induction much easier to clean and quicker and more responsive

            I find gas much quicker and more responsive.

            But having you own opinion is getting increasingly more illegal.

          • nemo5 on 04/01/2025 - 09:05
            +2

            @drillvoice: No wok hei

            • drillvoice on 04/01/2025 - 20:41

              @nemo5: This is true! I don't do any wok cooking, maybe if I did it'd be different. They are making induction hob for woks but I can see how that wouldn't be the same.

        • notme53 on 03/01/2025 - 19:43
          +9

          In the last 7 years I’ve moved between 5 houses, 3 with gas and 2 with induction. For general cooking there is nothing between them imo, but induction is easier to clean, and if you have solar then cheaper to run too (I didn’t have solar). The only thing gas might be better at is for wok cooking? Although I think you can get induction plates on cooktops specifically for that.

        • heineken016 on 03/01/2025 - 20:09
          +2

          Nahhh. Induction much better all round.

      • serpserpserp on 03/01/2025 - 22:33

        You don't cook with woks? I can't imagine the food coming out the same without that jet engine gas melting the food together!

      • Rontje on 04/01/2025 - 09:58
        +1

        Those chinese wok smokey style cooking wont work without gas

  • Frozensage on 03/01/2025 - 16:01
    +2

    CR is higher than my current ANZ loan. What’s up?

    • Big Paddy on 03/01/2025 - 16:04
      +3

      It's a carbon neutral rate

      • WhyAmICommenting on 03/01/2025 - 17:13

        (And this is a joke in case anyone’s not sure)
        flies away

        • ajole on 04/01/2025 - 08:02
          +1

          Username checks out

    • andyfc on 03/01/2025 - 16:28
      +11

      Some one please correct me if I am wrong, but the comparison rate is not a useful tool for when the loan is fixed or it's a low rate for a short set time period (e.g. 5 years).

      This is because the comparison rate is based on the total length of the loan, and usually with fixed rates or rates like these, they default back to a standard rate (which no one ever gets, i.e. pre discounts).

      So for 5 years you get the good rate, and after that it's a bad rate, hence, the CR looks poor. It would be expected someone on ozb would quit this before 5 years, so the CR could be meaningless. If you stayed with this deal for the life of the loan, like a reversion from fixed rate, you will be taken for a ride, but the CR would then be accurate.

      • drillvoice on 03/01/2025 - 16:53
        +4

        Yes this is a common thing with comparison rates. I used to think they were more transparent but they can be misleading. They are also based on a small loan of $150k. For someone with a bigger loan a lower interest rate is worth more and, as you say, they would probably change after 5 years if the rate stopped being competitive.

      • 1st-Amendment on 03/01/2025 - 17:39

        Some one please correct me if I am wrong, but the comparison rate is not a useful tool

        CR is a con. It uses unrealistic figures (ie a $150k mortgage over 25 years which almost no-one has) to come up with a CR that is useful for almost nobody.
        This is another example of what happens when public servants spend money that isn't theirs.

        • MrThing on 03/01/2025 - 18:48
          +1

          Im glad at least someone understands what a comparison rate is

          its a con and always has been…

    • samfisher5986 on 03/01/2025 - 16:52

      I assume the $350 annual fee.

      • netjock on 03/01/2025 - 19:40

        This annual fee thing I don't know why people put up with.

    • ely on 07/01/2025 - 16:42

      Comparison rates are (ironically) uselessly misleading, basically just ignore them.

  • cushydeskjob on 03/01/2025 - 16:13
    -1

    Well spotted OP.
    Don’t be taken in by the 5.38% headline rate.
    A quick search on a loan comparison website using the same terms as this offer ($150k over 25 years, 90% LVR) shows several loan providers offering superior deals once you take the comparison rate (CR) into account.
    I realise many OzB readers will be aware of this however not all are and a suboptimal choice can cost you thousands.

    • drillvoice on 03/01/2025 - 16:52
      +3

      As others have said, in some cases the CR won't be a useful comparison - for a larger loan the lower interest rate can offset any higher fees. In some cases it will be an important distinction!

      That said, I'd be interested to know what other loan offerings you see out there that may be superior? Particularly in terms of a variable loan?

      • ely on 07/01/2025 - 16:43

        For almost no loans are they useful, the fixed loan size of $150k is completely unrealistic given current property prices, only a relatively small number of people will be dealing with micro loans like that, and on a larger loan the rate is much more relevant than the fees. People need to run the numbers themselves and see what's actually better for their loan, given the fees and rates, not just look at either.

    • 1st-Amendment on 03/01/2025 - 17:40
      +4

      once you take the comparison rate (CR) into account.

      CR is a scam. Don't buy into the BS.

    • BlueGlass on 03/01/2025 - 22:25
      +1

      The average new owner occupier home loan amount: $642,121 (in September 2024).

      The CR is incredibly misleading because it does not align to the reality.

      The formula for calculating a comparison rate is regulated by the Consumer Credit Code. The rates are defined by legislation and calculated on a loan of $150,000 over a 25-year term for a home loan

      So guess what, consumers a treated like absolute mugs because there is insufficient reform to safeguard consumer needs by using an actually useful value.

      Your comment is 15 years out of date.

      • 1st-Amendment on 04/01/2025 - 09:05

        Your comment is 15 years out of date.

        It would be out of date if people still weren't still using CR today, but reading the comments here the scam is still alive and well…

  • mrklaus on 03/01/2025 - 16:15
    +4

    all-electric, no gas

    So annoying! 😔

    • ely on 07/01/2025 - 16:44

      You may still be able to qualify through other upgrades if you're already all electric.

    • jaimex2 on 03/01/2025 - 17:41
      -8

      Victoria's get off on getting told what to do.

  • idalla on 03/01/2025 - 17:06
    +3

    Any brokers on here that do cashback and work with Bank Australia? I want to take this up ASAP.

    • Tech and cars on 03/01/2025 - 22:57

      Same!

    • waynewing on 04/01/2025 - 10:05

      I think cashback from brokers is history now but happy to be corrected

    • Dinjay on 06/01/2025 - 07:06

      I don't believe Bank Australia does broker incentives or cashback.

      • ely on 07/01/2025 - 16:45
        +1

        My broker (who doesn't give cashback, unfortunately) has said that he can help me with this - and I'm sure he's not doing it for free.

  • OzRolla on 03/01/2025 - 17:20

    Any similar interest rate loans that don’t involve these electrical upgrades?

    • ely on 07/01/2025 - 16:46

      Many of the requirements do not require electrical upgrades although you do need to be all electric to qualify, so that may be a blocker - but if you're already all electric you can still qualify through other options.

  • lawbee on 03/01/2025 - 17:36

    I wonder how good bank australia is passing the future rba interest cuts to customers

    • A-H on 03/01/2025 - 19:52

      Nevermind that… Though they will pass on the upcoming increases no worries.

    • Inyokuchi on 04/01/2025 - 03:14
      +1

      Also Labor Government: We were charging EV tax in Victoria but the High Court ruled it was unconstitutional. We knew this so we decided to scrap the EV rebate in anticipation of that!

  • King Steuart on 03/01/2025 - 18:21
    -1

    Wait so in the past 18 months you have to have done three minor renovation changes to qualify for a checks notes homeloan rate loan? What's the incentive here?

    • drillvoice on 03/01/2025 - 18:34
      +3

      To my mind the extra incentive is that the rate being offered is lower than what you'd get elsewhere? As well as the fact that the changes themselves would save money.

    • ely on 07/01/2025 - 16:47
      +2

      idk about you but $8k/year in interest is a huge incentive for me

  • Brick50 on 03/01/2025 - 19:41

    Is this a home loan rate or a renovation loan?

    • drillvoice on 04/01/2025 - 20:42

      There is now loan for just purchasing a property. They have a loan for building a property or renovating an existing property.

  • jmondejar on 03/01/2025 - 21:56

    I wish they can do construction loan

  • serpserpserp on 03/01/2025 - 22:37
    -2

    So I have to retro fit stuff I've onto my property to then get a loan to demolish all those changes and do a reno? Then there are no conditions on what I use the reno money for?

    • ely on 07/01/2025 - 16:48
      +2

      No, it's just a home loan, one on which they'll give you a better rate if you've made some specific energy efficiency improvements to your home.

  • hothed on 04/01/2025 - 08:24

    If i build a new house that is 7 star, am i eligible for this loan?

    • 1st-Amendment on 04/01/2025 - 09:06
      +1

      7 stars is so last year, we all have 8 stars now…

  • waynewing on 04/01/2025 - 10:07
    +1

    The eligible property has a value up to $2.5m. ​

    The criteria rules out a lot of properties in NSW?

  • Zacsik on 04/01/2025 - 16:38

    Is there an offset available with this loan?

  • Ren0oo on 04/01/2025 - 17:32

    Electrifying everything is definitely the way to go, but living in WA gas is so cheap.

    So you pay these big costs for changing to induction cooktop, electric hot water, solar battery (already have solar but the battery #s don't stack up at current prices), only to realise you've put in a system that costs more to run than what you already had.

    Long term am a big advocate though. Solar battery prices are the one to watch. Inputs are in freefall with China heading towards overproduction & likely to flood countries that have not tariff them (ie. Australia). Same applies to those electric cars. I wouldn't buy a Chinese car myself but if I was that way inclined the prices in 5 years will be far lower what they are today inflation adjusted.

    • ely on 07/01/2025 - 16:49

      Over in VIC it will be a massive saving to run vs gas, so an easy sell here.

  • GS9891 on 05/01/2025 - 18:22
    -4

    A good home loan rate OR a good stove, I can't choose. (;_; )

    • idalla on 05/01/2025 - 23:01
      +2

      Have you used induction? Gas sucks, it’s poisonous, and is going to become incredibly expensive as network owners try to make their money back from a shrinking customer base before the pipes are ripped up.

      • GS9891 on 05/01/2025 - 23:11
        -1

        No, would have to buy a whole new set of cookware for starters, and I love my gas cooktop and unlimited hot water. Also no real worry about pipes for me at least, got tanks.

        And just don't breathe in the gas with no flame on and I think it'll be fine.

        • Brick50 on 06/01/2025 - 00:37
          +1

          Gas has been known to cause childhood asthma

          • GS9891 on 06/01/2025 - 02:21

            @Brick50:

            Research from the US suggested that one in eight (12.7 per cent) current childhood asthma cases can be attributed to gas stove emissions.
            An estimated one in 10 Australian children affected by asthma

            So basically 10% of 10%, or 1 in 100 kids, research 'suggests'.

            Well any worried parents can of course switch if they want, hardly a reason to spend $10k~ renovating one's kitchen and hot-water system otherwise though.

            • Brick50 on 06/01/2025 - 14:45
              +1

              @GS9891: I assume a lot more would be caused by gas ducted heating, which I am planning to get rid of too

              • ely on 07/01/2025 - 16:51
                +1

                @Brick50: Nah, far less with the gas heater, the gas there is generally completely isloated from the living spaces vs gas cooktops where it's injected into it and then burned.

                Also planning on removing on gas heating (and hot water, and cooktop). It will cost far less than $10k for the cooktop and hot water, not even half that.

                • Brick50 on 07/01/2025 - 21:33

                  @ely: I'm in Vic so have rebates
                  I started with a 10kw solar system in August last year, no plans for any other new appliances.

                  Month later I have a heat pump hot water system ($1500 for Aquatech X8 inc dedicated circuit) Reduced my gas usage from $50-60 a month to $2 a month.

                  am finishing fitting up my induction cooktop tonight and get electrician to wire it up next week
                  Only remaining gas appliance is the ducted heating, which I will get decomissioned for rebates towards winter when the installers are a little quieter, but plan on closing out my gas account now

                  • ely on 08/01/2025 - 11:29

                    @Brick50: I'm also in VIC, but not eligible for the Solar VIC rebates on solar or hot water due to (poorly structured) means testing. Still eligible for VEU rebates and the federal STCs.

                    Planning on a very similar plan to you, although solar later - no benefit right now when I use no electricity. Will cut the gas while still having the ducted gas heating present so as to qualify for the loan, but look to replace with ducted AC when I can afford it. Will do solar before winter, may offset some of the cost of using space heating until I can afford the heating replacement!

  • jmondejar on 17/01/2025 - 15:07

    My broker is saying that affordability is super high for this loan compared to other loans. Is that right?

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