The Green deal: Misconceptions and why you can save money…

Having covered some problems last time from a reader I wanted to give a few reasons that for many to apply for the Green Deal loan and clear up a misbelief on what this deal offers.

Having covered some problems last week from a reader I wanted this week to give a few reasons that for many to apply for the Green Deal loan and clear up a misbelief on what this deal offers.

Having covered some problems last week from a reader I wanted this week to give a few reasons that for many to apply for the Green Deal loan and clear up a misbelief on what this deal offers.

Firstly – this scheme is the biggest home improvement initiative by the government launched since the second-world war. There is a £3m marketing budget behind it – but still most don’t know about it. The aim of it is to help all households install eco-friendly equipment – such as condensing boilers or insulation – at no upfront cost which will potentially save us money on energy bills and stop the carbon emissions our homes give off. As explained last week, homeowners pay the money back in instalments through their electricity bills, with the repayments in theory offset by energy savings.

However, although it is a government scheme, there is no state subsidy, and for those companies assessing your property or that do the work they are free to set their own charges. The assessment is typically £90 – £150 for coming into your home and spending approximately one hour in assessing what is needed and giving advice on what energy efficient measures would suit your home.

But many are critical of what the interest rate for these Green deal loans will be. It’s expected to be on average 7% – and many think this is too expensive. And it sounds expensive if just compared to current mortgage and personal loan deals on offer. But current mortgage rates are incredibly low – as low as 2 – 4% on average. Or if we look at current personal loan rates, Sainsbury’s Bank currently offers a personal loan rate of 5.5% – but here’s the thing, these headline rates are available to few. Unless you are in a high paying full-time job and have a squeaky clean credit rating you won’t be offered these rates. You will be offered a rate usually between 12% and 29%!

Which is why I believe the Green deal loan if offered to you at just 7% for interest payments – and no upfront cost is not a bad deal in this current ongoing credit crunch…