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Green Deal Government Scheme

Green Deal Government Scheme
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In an effort to promote ‘green living’ and also to help meet its reduced emissions targets, the government introduced the Green Deal. There is a lot of confusing information circulating, about what it is and how it works, so here is our ‘What You Need to Know’ guide to bust the myths and give you the basics.

In a nutshell – the Green Deal offers a chance to make your home more energy efficient with the installation of things like double glazing, new boilers and solid wall insulation. Costs of installation are financed by a loan that you pay back from the energy savings you make. Overall it should cost you nothing.

It’s not a Traditional Loan

Fear of taking on debt has made many people wary of signing up for the Green Deal. But the loan provided by the government is not like credit in the traditional sense. This is because:

  • Your repayments are set at a level equal to the predicted cost of the savings made on your energy bills as a result of the home improvements you receive. So let’s say, your energy bills were £100 each month and you take a Green Deal loan for loft insulation. The predicted saving on your energy bill from this snug new loft may be £10 a month. Your energy bill reduces to £90 each month; the other £10 is paid back to the government as a loan repayment. Your monthly costs remain at £100
  • Your energy provider organises the repayments
  • The repayment schedule is spread over 10-25 years, keeping payments to a minimum
  • The loan transfers to the new owner if your sell your home

You Won’t Necessarily ‘Save’ Money

The scheme should never cost you more to repay than you have saved in the cost of your energy bills. While your bills may reduce, the balance of what you would have paid will be used to pay off the loan. So until the loan is paid off you are not necessarily gaining financially (although your home should feel considerably more comfortable).

In some cases, however, the performance of your home improvements may exceed government predictions. In this instance you may find that your monthly costs do actually go down and save you real money. In the example above, the cost reduced by £10 each month and was used to repay the loan. If your real costs reduced by £15 each month, the energy company would still only take the predicted £10 saving as a loan repayment, so your new monthly bill would be £95 – a saving of £5 in your pocket.

A Variety of Home Improvements Qualify for the Loan

Green Deal Government SchemeHome energy improvements come in many forms – obvious ones include cavity insulation, double glazing and loft insulation. But other less common improvements include the installation of solar panels, draught-proofing and under-floor heating. The list of potential improvements is long; don’t rule out the deal just because you already have the traditional energy-saving provisions in place. The primary criteria for acceptance of a loan is that the proposed improvements will save money on your energy bills, allowing for repayment of the loan in this manner.

Green Deal Assessments Cost Money … But …

In order to be assessed for Green Deal eligibility, you have to pay. But, there are free online checks that you can do to give an advance, giving you a rough idea of whether it would be worth your while forking out. Also, Green Deal assessors do vary in what they charge for their services – typical prices range from £100 to £150, shop around for an assessor in your area who is offering a good deal.

Additionally, assessors may be in a position to offer the cost of the Assessment as part of the deal for any improvements you subsequently make, provided you do so through their company – effectively this wraps up the price of the assessment within your loan, so it costs you nothing.

The Payment Part

The following points are important to know about Green Deal Loans:

  • They are normally unsecured – in the event of repayment difficulties, they can’t take your home away
  • The interest rate varies – shop around for the best deal, as interest over a 10-25 year period can soon mount-up
  • You can repay your Green Deal loan early without penalty – if you have the cash later you can get rid of the debt and start enjoying the savings directly
  • You can still switch energy provider – as long as your selected provider has signed up to the Green Deal (and most of the big names have)

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About Cally Worden

About Cally Worden

Seasoned freelance writer Cally Worden lives with her family and dog in a quiet corner of rural France. A love of the outdoors, and a fascination with her children's ability to view life with fresh eyes provide the inspiration for much of her work. Cally writes regularly for various websites and UK print publications on subjects as diverse as parenting, whatsapp plus,travel, lifestyle, and business, and anything that makes her smile.

Website: Cally Worden

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