You've probably heard that interest rates are on the rise and national property prices are on the way back down. Here's how you can kill two birds with one stone: by refinancing to unlock equity and giving your home an energy-efficient makeover at the same time.
Did you know that energy-efficient homes generally attract premium prices and sell faster than non-eco listings?
That's according to the 2022 Domain Sustainability in Property Report, which found an energy-efficient house in the median range sells for $125,000 more (+17.1%) on average than a non-sustainable house.
The results are quite good for apartment owners too, with energy-efficient units selling for $72,750 more (+12.7%) than non-energy-efficient apartments.
Dr Nicola Powell, Domain's chief of research and economics, says more and more sellers are addressing the demand for eco-friendly homes, as online listings with popular eco features attract 8.7% more views on average.
"More than half of all for sale listings in all states and territories contain energy-efficient keywords," she says.
Installations that are popular with potential buyers
Here are the top three eco features popular in house listing searches right now.
1. Solar power: Australia has no shortage of sunshine. And there's no shortage of demand for houses with solar panels either. A 2020 Origin Energy survey showed 77% of Australians view houses with solar panels as being more valuable. And 55% of renters said they would consider paying increased rent for solar panels.
2. Water tanks: if you have a sizable garden or lawn, a sustainable irrigation system can help keep your water bill down. Make use of the rainy season by collecting water in tanks. When the dry season hits, you'll be prepared with free, nutrient-dense rainwater to lavish on your garden.
3. Insulation and glazing: window glazing and insulation can help stop your heating and cooling efforts from leaching out. You'll also reduce the summer heat and winter chill invading your home.
Financing your eco reno
Depending on your situation, many lenders now offer green loans to help homeowners install environmentally sound features - and the good news is that lenders usually offer lower interest rates on green loans in an effort to encourage sustainability.
Another option at your disposal is to unlock the equity in your home to fund your eco reno.
And it's not a bad time to consider doing so, as property prices increased 23.7% in 2021.
So how does 'unlocking equity' work?
Well, let's say you bought an $800,000 house three years ago that, due to last year's property price surge, is now worth $1 million.
And let's also say you took out a $600,000 loan for that house, which you've managed to pay down to $500,000 (hurrah!).
By refinancing that $500,000 loan into a $700,000 loan (70% of your property's new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations.
It's also worth noting that banks will typically let you borrow up to 80% of a property's market value.
And don't forget to check out any government rebates that may be available for eco your installations.
Get in touch today
If all of this seems confusing, don't fret! We're more than happy to help you navigate loans, equity, and refinancing for your eco reno.
And if you decide to proceed, the good news is that part of the process can include refinancing your home loan.
Why's that good news?
Well, just because interest rates are going up, doesn't mean you can't scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.?
So if you'd like to discuss your reno and/or refinancing options, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.