Green Lending: How to Finance Eco-Friendly Home Improvements
The time has come to inject some love and cash into your home. Maybe it’s due for some basic updates and repairs — land and structures do wear down with years and usage after all. Or perhaps your needs and tastes have changed and your humble abode needs a major overhaul to align with your current life and style.
Either way:
- It’s an opportunity to make your house into the best, greenest version of itself.
- It can be a costly endeavor. Many people must secure financing to be able to afford renovations.
In this post, we start by digging into why you might want to harness sustainability-centered principles as you renovate your home. Then we’ll cover everything you need to know about green loans and why you should consider working with your credit union to get eco-friendly financing.
Why Green Your Home?
There are likely infinite reasons to give your home an environmentally-conscientious reboot. Among the biggest motivators? Here are some popular picks:
- Save money. While many eco-forward home improvements can ring up a fairly hefty initial bill, they often save beaucoup bucks — usually on energy costs — in the long run.
- Mitigate climate change. A home that’s more efficient has a smaller relative footprint. Planet-loving modifications to your house can reduce resource usage (e.g., use less water and electricity), prevent loss of resources (e.g., keep heat from seeping out through windows), and make better use of the resources you’re consuming (e.g., gray water recycling).
- Live shrewdly. Some people just simply hate being wasteful — they find it very appealing to use as few resources as possible and then squeeze every last bit of value out of them. Smart home renovations can be a way to bring their reduce-reuse-recycle mentality into their everyday living spaces.
- Make money. Think resale. Numerous studies show that green homes often sell faster and earn a premium over their un-green counterparts.
As you can see, the incentives run the gamut of economical to ideological. If you’re considering greening your home, you probably identify with one or more of these rationales.
What Is a Green Loan?
The World Bank defines a green loan as:
“...a form of financing that enables borrowers to use the proceeds to exclusively fund projects that make a substantial contribution to an environmental objective.”
In practical terms, a green loan is a personal loan or home equity line of credit (HELOC), the funds from which you’re pledging to put towards updates and repairs that are eco-friendly.
How to Use Green Lending
The premise of a green loan for home improvements is to make alterations that result in positive environmental impacts. So, the sky’s practically the limit!
Here are some ways homeowners might use green financing to tackle landscaping and structural issues that are harmful (or, at least, not helpful) to the planet:
- Weatherizing with double-paned windows and more insulation
- Putting solar panels on the roof
- Implementing a drip irrigation system in the yard and garden
- Switching to a tankless water heater system
- Reflooring with eco-friendly or recycled materials
- Upgrading to Energy Star home appliances
- Installing a smart thermostat
How to Get a Green Loan
Every lending institution is different, but you’ll probably follow a similar process as with other personal loans or lines of credit.
There will be an application process. This entails submitting an application with any required supporting documentation. You may be asked to show proof of income, home value, construction estimates, and so on.
Along with your application and other paperwork, the lender might want to do a personal interview. This is also a great chance for you to ask questions and start angling towards the best possible loan terms and conditions.
It’s reasonable to expect that, the more money you’re asking for, the more due diligence the lender will do.
Why Finance Green Home Improvements
Any foray into residential renovations can take a sizable bite out of your savings. However, making your home eco-friendly can be even more expensive…upfront. One estimate we saw indicated that green upgrades can be at least 20% pricier than traditional options.
For many, there’s no other way to accomplish the desired home improvements without some financial help.
At a more macro level, taking the plunge to change your home so that it’s more energy- and water-efficient can be a fiscally-sound decision. The long-term payback from implementing environmentally-friendly renovations can far out-pace the initial expenses. It could prove to be a solid investment.
Benefits of Getting an Eco-Friendly Loan from a Credit Union
Credit unions are non-profits that have a mission to support their communities. As such, the concepts of environmental stewardship and backing their members’ efforts to green their homes is a natural fit. When you get a loan or line of credit from a credit union, you can feel confident that they understand your motivations.
On top of sharing this mindset (and the planet Earth), you will come out ahead if you get financing through a credit union instead of a regular bank. For example, at Valley Credit Union, you’ll enjoy:
Valley Credit Union — Your Evergreen Source for Green Financing
VCU’s always here for you. When you’re ready to make your dream home even dreamier and more sustainable — and are trying to figure out how to make it happen — our knowledgeable staff can help. We offer a variety of banking and loan products, as well as services and resources, to move your green home improvement project from idea to implemented.
Don’t hesitate to contact us today to discuss your needs.
About the Author
Katie Clark, Director of Administrative Services
Katie Clark has been at Valley Credit Union since 2011. She serves as the Board Secretary and oversees Human Resources, Marketing and Facilities for the credit union, some even call her the credit union mom. As a CUNA and GoWest HR council member she stays connected with the latest industry happenings. When she’s not in the office she enjoys weekends with family & drinking wine at the Oregon coast.