Financial Aspects & Cashback
The initial interest rate from The Green Deal Finance Company (TGDFC) is 6.96% per year. There will be a start-up charge of £63, plus an annual operating charge of £20 payable by the Green Deal Provider (who may well pass it on to customers).
Green Deal Providers will be able to determine their own all-in package which they will offer to consumers. The indicative interest rate for all-in Green Deal Plans (loans) of £5,000 will be between 7.67% (over 25 years) and 7.6% for a 10 year plan. The rate will be higher for smaller loans – for example 9.3% all in for a £1,500 loan over 25 years.
According to TGDFC “rates will be comparable to the best high street rates for long-term unsecured loans. But whilst these are accessible to barely half the population, TGDFC will lend to over 80%.” Whether or not you think this is a good deal will probably depend on your circumstances, and how easily you can access alternative forms of finance.
Make sure you look at the small print, as there are likely to be penalty clauses if you want to pay off the loan early.
Warm Wales can arrange independent financial advice to see if it makes more sense to borrow on your mortgage or whether there are local grants or other incentives.
Green Deal Cashback
To encourage take up of the new scheme, the government has launched the Green Deal Cashback scheme. This means that you can claim cashback on a range of energy saving and energy efficiency measures you install. The government has put aside £125m for this scheme.
Homeowners, tenants and landlords are all eligible for the Green Deal Cashback – but only if you are the one who is paying for the installation (payment can be through a Green Deal charge on the property, or any other means). You can claim up to half of your contribution to the cost – although rates for individual measures vary.
Improvements that are eligible include: insulation, double or secondary glazing, boilers and draught proofing. Cashback rates are available on the Green Deal website – www.gov.uk/green-deal-energy-saving-measures
To claim the Green Deal Cashback you must:
- have a Green Deal assessment carried out on your property
- get and agree quotes from a Green Deal Provider (this could be directly with a national brand or through a local tradesperson linked with a Provider)
- apply for a Cashback voucher online at https://gdcashback.decc.gov.uk/ or by phone (0300 123 1234). You must have your EPC reference number and the agreed quote from your Provider to apply. To make things easier some Providers will be able to apply on behalf of their customers
- receive a voucher confirming the Cashback
- complete the works within a specified period
- redeem the voucher, along with evidence of works completed, for Cashback.
- If you don’t want to keep all the Cashback yourself, you can donate it to charity.
The specified period is six months for solid wall insulation and three months for all other improvements, and in all cases before 31 March 2014.
You do not have to fund the improvements through a Green Deal finance plan (this is the one that you pay back through your electricity bill). However, you must use a Green Deal Provider to arrange the work.
It remains to be seen whether using a Green Deal Provider will increase the cost of a job, and if so, by how much. If you don’t need the Green Deal for the finance, it might be worth comparing the costs with your preferred local supplier.