From 2012, Britain’s energy companies will begin offering a new loan scheme, known as the Green Deal, to help homeowners improve the energy efficiency of their home through improved insulation.
The Green Deal will cover the cost of the following home insulation measures:
- Loft insulation
- Cavity wall insulation
- External solid wall insulation
- Internal solid wall insulation
How does it work?
The Green Deal is aimed at helping people who want to make their home more energy efficient but lack the funds to do so.
Once it is launched, you will be able to apply for a loan from your energy supplier to cover the cost of insulation work. As with any loan, the amount you borrow (plus interest) will have to be paid back over a certain period, known as the loan term.
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This could range from anywhere between 5 – 25 years, depending on the amount you are borrow and the type of insulation work being carried out.
The repayments on your Green Deal loan would be included in your monthly or quarterly energy bill.
The major plus point of the Green Deal is its ‘Golden Rule’, which states that the amount of money saved on energy bills through the insulation measures must be greater than the amount repaid on the loan.
Can I still switch energy providers?
Taking out a Green Deal loan with a particular supplier will not prevent you from switching to another provider in the future to take advantage of a cheaper energy deal.
If you change suppliers, your loan will still be in place and you will continue to pay it off as normal. However, your new supplier will become responsible for collecting your loan repayments and passing them onto your old energy supplier (i.e. the Green Deal provider).
What happens if I move home?
Green Deal loans will be attached to the properties where the insulation measures are carried out, and not the owners. This means that if you have a Green Deal loan in place and decide to sell you home, the repayments on the loan will become the buyer’s responsibility.