If you’re thinking of making your home more eco-friendly, there’s no better time to do so then during a home makeover. After all, if you’re stripping out old fixtures and replacing worn-out fittings, it’s a simple thing to put sustainable products and green installations in their stead. 

To that end, a green renovation loan might just be the ideal financing solution. But how do these loans differ from regular renovation loans, and what should you watch out for when choosing one?

Table of contents:

• What is a green renovation loan?
• How does a green renovation loan work?
  • DBS Eco-aware Renovation Loan
  • Green home mortgage loans
• What's the difference between a green renovation loan and a regular renovation loan?
  
  • Choosing a green renovation loan - pros and cons
• Frequently Asked Questions (FAQs) 

What is a green renovation loan?

A green renovation loan is a type of renovation loan used to pay for the purchase and installation of eco-friendly features and appliances as part of a home makeover. 

Such loans are offered to consumers who wish to adopt green and sustainable practices at home, such as by switching to renewable energy sources like solar power, installing heat-reducing solutions, choosing energy-efficient appliances and products, and committing to only using eco-friendly products and practices during the renovation. 

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How does a green renovation loan work?

A green renovation loan works largely the same way as a regular home renovation loan. The standard eligibility requirements, such as income level and proof of home ownership, still apply. Additionally, green renovation loans are also capped at S$30,000 per loan. 

However, green renovation loans have additional requirements involving eco-friendly or sustainable features, products and appliances. To qualify for the loan, your renovation project must include their use or installation. 

At present, the only green renovation loan available for homeowners is the DBS Eco-aware Renovation Loan. 

DBS Eco-aware Renovation Loan

• Loan quantum: 6x monthly income, or S$30,000, whichever is lower
• Loan tenure: 1 to 5 years
• Loan interest: 5.68% p.a. (EIR 6.40% p.a.) 

This loan comes with the requirement to fulfil at least 6 items on the Eco-aware Renovation Checklist, as follows:

• Using certified eco-friendly materials, such as low-VOC paints, non-toxic floorings, laminates and coverings
• Using houseplants or air purifiers/dehumidifiers to improve indoor air quality
• Using energy-efficient LED lighting
• Using task lighting instead of general lighting, which uses comparatively more energy 
• Installing smart lighting management systems (activity sensors, mobile app-controlled lighting systems)
• Using solar films, curtains or blinds to reduce heat penetration
• Using ceiling fans for ventilation
• Using certified energy-efficient air con systems and electrical appliances 
• Installing solar panels, home batteries, EV charging stations or solar heaters
• Switching to a green energy plan provided by an energy retailer

Green home mortgage loans

Another option for green-minded homeowners is green mortgage loans. 

These are financing options that can be used when purchasing properties that have been certified to be eco-friendly, such as homes that have been awarded the BCA Green Mark. 

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What’s the difference between a green renovation loan and a regular renovation loan?

The main difference between a green renovation loan and a regular renovation loan is the additional requirements regarding certified ecologically friendly features, products, and services. These include using non-toxic materials, installing energy-saving or clean-energy products, and making other improvements towards greater sustainability. 

While it is admirable to do your part for the environment whenever you can, it is essential to evaluate such loans against regular renovation loans. If a green loan is significantly more expensive, it is prudent to consider the additional cost. 

Besides, you can still make the same eco-friendly choices when choosing materials and solutions on your own, and hire a renovation contractor that is committed to green practices. 

Choosing a green renovation loan – pros and cons

In essence, we can sum up the pros and cons of choosing a green renovation loan as follows.

On the upside, you’ll be making a concrete contribution to sustainability and green causes, allowing you and your family members to effortlessly reduce their carbon footprints and transition to a more ecologically sound way of living. Furthermore, the changes you implement to your home, such as energy-efficient lighting, continues to benefit the environment over a long period. 

On the downside, you may potentially face limitations in your renovation choices. For instance, a particular shade of paint colour may not be available in low-VOC versions, forcing you to change your design choices. 

To be fair, the positive impact of choosing green choices for your home renovations will likely far outweigh any potential short-term inconveniences or hurdles, so on balance, the pros definitely win out over the cons. 

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Frequently Asked Questions (FAQs)

Banks offer green renovation loans as a way to satisfy consumer demand for eco-friendly products and services. In return for taking up the loan, consumers may receive vouchers or even preferential interest rates. 

As a home renovation is a good opportunity to install green features such as energy-saving lights and smart home controls to reduce energy wastage, a green renovation loan can be a rewarding way to fund such changes. 

Read these next:

How To Apply For A Renovation Loan In Singapore?