It's called the Green Deal. But in reality, it's a way of paying for the cost of double glazing, solid wall insulation, boiler upgrades and much more from the projected savings you'll make on energy bills.
The Green Deal gives special 'loans' or grants to improve your home to cut energy bills. You needn't be on a low income - anyone can apply
Energy efficiency isn't just about group hugs, sandals and saving the planet. It can save you £100s each year on your gas and electricity bills and, just as importantly, make your home a more pleasant place to live in.
The big idea is that the Green Deal helps you make energy-saving home improvements to your property, and you pay for it using the savings from your energy bills. You also get a snugger home.
You can borrow money to upgrade boilers, install loft or cavity wall insulation and much more. Unlike many energy efficiency grants, it's not just for those on lower incomes (though more help's available if you are).
Can I do the Green Deal if I rent my place?
If you're renting and want to improve your pad, you need your landlord's permission, as Green Deal repayments will affect future tenants. Similarly, landlords need tenants' permission to sign up too, as tenants pay the bills, whether within their rent or directly.
Almost eight million people in the UK rent their home, so the Government is also encouraging landlords to sign up to the Green Deal.
Currently, you can't force your landlord to improve their property. But from April 2016, landlords won't be able to refuse reasonable improvement requests from tenants.
And by April 2018, landlords with poor Energy Performance Certificates ratings (F or G) will be forced to make their properties more efficient, by either bringing them up to an E rating, or by carrying out the maximum package of measures that can be funded under the Green Deal - so it could be worth encouraging them now.
Landlords can get more info from the National Landlords Association's Green Deal service.
Can I do the Green Deal if I'm on a prepayment energy meter?
When you borrow via the Green Deal, you make your repayments through electricity bills. But you can still get Green Deal improvements if you're on a prepay meter. A small amount will be taken from the electricity meter each day, in addition to the energy you use.
For example, suppose you use £1.50 of electricity per day. If you're also paying back the Green Deal, you'll see more than £1.50 go off the meter that day. The amount will depend on your loan repayments.
As Green Deal repayments are only taken from electricity bills, if your efficiency saving is on your gas bill (eg, a new boiler means you save gas), you may have to top up your electricity key or card more often to compensate.
If you're on a prepay meter, it's also worth checking if you qualify for grants to warm up your home. Energy companies are obliged to help people on low incomes and in low-income areas under a different scheme called Eco – read more about the Eco scheme.
Also if you're on a prepay meter, don't assume you can't get a cheaper tariff by switching provider or by just getting a better deal. See Cut Prepayment Energy Costs.
What if I'm in Scotland or Northern Ireland - does it apply?
The Green Deal scheme runs in England and Wales. There's also a separate Green Deal Scotland scheme, which works in a similar way - we'll point out where things differ at the relevant point in the guide.
For more information, call Home Energy Scotland for free on 0808 808 2282, or fill in the callback form and ask them to call you.
There's no Green Deal in Northern Ireland. The Northern Ireland Assembly is considering how best to spend its share of Green Deal cash, but it hasn't made made any decisions.
In the meantime, there's a wealth of information on energy-saving measures, including what grants are available to NI residents on low incomes, through NI Direct Energywise.
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A note from Martin
The Green Deal is one of the Coalition Government's big ideas. The fact it has a political dimension, by its very nature, means some will say it's the best thing since sliced bread, others that it sups with the devil.
We've tried to ignore that in this guide. The team and I have focused on the practical, financial standpoint: "Is it right for you?" For some, but not all, it is a very powerful deal that should be seriously considered.
Just as in the Student Finance Mythbuster guide, the big fear factor comes from the fact much of the help's couched as an interest-charging loan, enough to frighten the bejeebees out of many people.
Yet if you're debt-averse, don't just ignore it. This could be a great way to make your home a warmer, more energy-efficient place to live without any increased outlay.
In truth, though, frankly I think the deal could've been structured slightly differently, with the same outcome. If no interest was charged, a mythbusting piece like this wouldn't be so necessary.
Yet, of course, there is another element. If it does catch on (the jury's still out on that), it could help improve the UK's incredibly inefficient housing stock. In the long run, that's our only chance of cheaper energy bills.
It's a debt, Jim, but not as we know it. For many, it won't ever increase their monthly costs
It's been billed as a loan, which will, wrongly, put many people off. Yet it's not a debt in the traditional sense:
You pay back only what you're predicted to save on bills each month, so there's no NET cost.
If your energy bills are £1,000 a year now, all being well (more on this later), your energy bills PLUS Green Deal repayments (including interest) won't be more than that. So there's no net increase in cost, and your home's more efficient.
It credit scores lightly.
The credit eligibility criteria are less tough than normal lenders'. So more than 80% of people should get accepted – far more than for a normal loan.
Repayments are spread over a long term.
The homeowner (that's you, unless you move, when it moves to the new owner) pays the money back over 10 to 25 years.
The energy company makes repayments for you.
You don't actually repay the loan directly, your energy firm does it for you out of your electricity bills. So, just to hammer it home, that means you should pay at most the same as you do now, until the loan's paid off – then you'll feel the big benefit.
What happens if I get into financial difficulties on my energy bills?
If you're struggling to pay your energy bills, whether with a Green Deal plan or not, your first port of call should be the Home Heat Helpline (0800 33 66 99). It's a confidential service that tells you if you're entitled to help, and what help you could get.
If you can't get help, call your energy supplier. Energy firms must work through solutions with people who are struggling – this is no different if you've Green Deal payments.
Your supplier may suggest a payment plan, or it may put you onto a prepay meter, so you always know how much gas and electricity you have left.
Cutting your supply is, and always will be, a last resort. Energy firms have agreed not to cut off vulnerable households' supplies in winter months, no matter what their struggles are.
Some energy suppliers reserve the right to share default data with credit reference agencies if you can't pay bills. Check our guide to see if your energy company shares data.
If you've a wider debt problem, and struggle to pay other debts, see our Debt Help Guide.
You should never have to repay more than you 'save' in reduced energy bills
This is the most important thing to understand. So let's labour it a little bit. You only have to repay what you're predicted to save on your energy bills each month.
Imagine Mr Ivor Coldhome gets loft and cavity wall insulation costing £900. For his three-bed semi, it's estimated this'll knock £160 off his energy bills each year.
Ivor takes a loan for £900 (plus a £63 admin fee) at 10.8% APR. His finance plan means he repays £108 a year for 25 years, after which his loan and interest is fully repaid.
So with £350 cashback for installing home improvements through Green Deal, as his savings are more than his repayments, he's £401 better off in the first year, and £51/year after that.
You repay through your electricity bill. So the idea is that your bills (you may save on gas or oil bills, not necessarily electricity) decrease enough to cover the repayments, so total energy bills stay about the same until the loan's paid off.
So why is it 'save', not save? Because it's based on nominal, not real, savings
In a perfect world, the saving would be based on the actual reduction in your energy bill thanks to the improvements. Yet that's impossible to work out, as so many different factors come into play to affect this.
So the savings figure is based on average savings predictions, incorporating the following factors - though all use typical behaviour, not your own, to make the assessment:
- What you're having done (eg, a boiler is different to double glazing)
- Your home's size
- The average occupancy for your size of home
- Typical number of rooms not heated
- Typical hours of heating used
- Typical thermostat setting
Your assessor will work out the average energy saving for a home of your type for that improvement. They'll then compare it to your usage – whether your heating's on for fewer hours, whether you live alone or have a brood of six.
Assessors have been advised to make very conservative estimates of savings, as well as factoring in future energy price rises. This means for most typical energy users, if you do it right, the true saving's likely to be more than the repayments, so you'd be quids in. But if your usage changes, there's a risk it'll go the other way (see point 14).
Check your advice report carefully. It'll tell you your average savings, so compare your energy use to those. It should also say if you're a low user, and could lose out.
The Green Deal can be used for 40+ improvements, from double glazing and boiler upgrades to underfloor heating and loft insulation
Cash is on offer for a plethora of energy-efficiency improvements, a bigger list than than under previous schemes.
You could be eligible for one or a combination of the following. The only limit's how many improvements will be useful, and if they'll pay for themselves through Green Deal finance.
Cavity wall insulation
Most homes built since 1920 have a gap between internal and external walls. Filling the cavity with insulating mineral wool and foam means that cold air's kept out, and warm air in.
Cavity wall insulation is one of the cheapest energy-saving home improvements, and pays for itself very quickly. Though if you're looking to do this, note you may be entitled to Free Insulation anyway.
Double-glazing your home means you're doubly protected - from your heat getting out and from the cold getting in. The layer of gas between the two windows traps heat inside.
While it's expensive, so can take longer to recoup your outlay, double glazing could boost your home's value, as it's often top of buyers' wishlists.
Draught-proofing is where you check windows and doors, floors, loft hatches, electrical fittings and pipework for anywhere that cold air is getting in, then stop up the gaps.
It's a simple measure with a big impact. It's also one you could easily do yourself - check out this Energy Saving Trust guide.
Solid wall insulation
Solid walls don't have a cavity gap between the internal and external walls - and they're much harder to insulate. It's common on houses built before 1920.
Those with solid walls can choose whether to insulate them inside or outside. If outside, a layer of insulation material is fixed to the existing walls, and then covered with protective cladding/render. You can paint it, add brick slips, or even pebble-dash it.
Inside means sacrificing around 10cm of room space along the whole wall. Here, you fix insulating boards to the existing walls, or build a fake wall and fill in the gap with insulating mineral wool.
Internal solid wall insulation is much cheaper than external, but is more disruptive. You can read more about solid wall insulation below.
Boilers are the biggest contributor to your energy bills. The more efficient your boiler is, the more heat it can produce from each unit of gas.
Depending on how old your boiler is, you could save up to £300 a year by getting a new, efficient model. Think about insuring your boiler too - could you pay for repairs if it broke down? See our Boiler Cover guide for cheapest cover options.
Think of heating controls as having an all-knowing being in charge of your heating and hot water. You tell it the temperature you want, and it turns radiators on and off to keep that temperature level - 18-21 degrees Celsius is considered comfortable.
The controls ensure you don't go from one extreme to the other, overheating the home, turning heating off, losing all the heat, then repeating the process again.
Loft insulation's quick and cheap. It pays for itself very quickly. For a few hundred quid, you can stop up to a quarter of your home's heat escaping through the roof.
It involves laying mineral wool under the rafters. You'll need to clear all the junk from your loft beforehand (or pay someone else to do it for you as part of the installation).
"Solar power? Hang on, we don't live in California!" It's actually about daylight, as panels can still generate some electricity on gloomy days - vital when the weather's as dull as watching Steve Davis watching paint dry.
There are actually TWO types of panels. Thermal panels just heat water while photovoltaic (PV) ones generate electricity. It's PV ones which have sparked all the fuss, though you'll usually need a south(ish) facing, unshaded, reasonably-sized roof.
Hate walking around on a cold floor? Underfloor heating can put an end to that. Heat rises, so if the heat's coming from your floor, then it'll heat the whole room. You'll be toes-ty warm in no time.
Underfloor heating can be costly, depending on how big an area you want to heat. It's also disruptive as you need to take up any carpeting and floorboards to lay the cables or pipes. Underfloor heating works best if you have tile, stone or wood floors.
Many more improvements
You can also grab loans for a host of other improvements. Your assessor will flag up which ones are suitable. For a full explanation of all of them, go to the Energy Saving Trust.
Air source heat pumps
Biomass room heaters
Hard-to-treat cavity wall insulation
Hot water showers (efficient)
Hot water systems (efficient)
Hot water taps (efficient)
Fan assisted replacement storage heaters
Flue heat gas recovery devices
Ground source heat pumps
Heating ventilation and air conditioning controls
High performance external doors
Hot water controls
Hot water cylinder insulation
Mechanical ventilation with heat recovery
Micro combined heat and power
Micro wind generation
Oil fired condensing boilers
Pipe work insulation (lagging)
Room in roof insulation
Sealing improvements (incl ducts)
Solar blinds, shutters & shading devices
Solar thermal hot water heating
Transpired solar collectors
Warm air units
Waste water heat recovery devices (in showers)
Water source heat pumps
Variable speed drives for fans and pumps
To get the Green Deal, you need to pay an assessor about £120 to visit your home. So do a speedy home check-up first
Okay, to be eligible for this, you're going to have to shell out upfront.
The assessor comes to inspect your home and works out where, in an energy sense, it's leaking cash. (To see if it's leaking in a money sense, use our Money Makeover guide). They also check your energy bills, and ask questions about your usage.
You should get your report a few days after the assessment. This'll flag up potential energy-saving improvements and how much you could save. Plus it'll highlight any extra subsidies you're eligible for (read more on getting it free).
Do a free speedy home check-up first.
Don't shell out for an assessment before doing an online check first. The easy 'n' speedy way to see what improvements could help is answering a few questions on 1 Green Place's Home Survey tool (this is from an assessor organisation, so be aware it may contact you). If you get an assessment but don't qualify, you won't get your cash back.
It's not a fixed fee - some may do it cheaper.
Assessors must be members of the Green Deal scheme. There are over 500 organisations to choose from. Some are nationwide, some are local outfits serving specific areas - search for an assessor near you.
Costs for the assessment tend to vary from £99 to £150, but £120 is typical.
Check whether your local authority has cash for assessments
The Government often offers cash that local authorities can apply for to promote the Green Deal in their areas.
In the past, this has resulted in local authorities offering free assessments. It's worth checking if your council has applied for a grant recently and seeing what it's doing to promote the Green Deal.
You may get the assessment cost back
Many of the companies doing Green Deal assessments will also be able to install your energy-efficiency measures too. Often these firms will take the assessment fee off the cost of the work if you choose to do it through them. But you're free to pick other companies too, so always compare prices.
Will the assessor try and sell me something else?
Remember many (but not all) Green Deal assessors are attached to a company that can carry out the work for you.
They could try to flog a conservatory or new kitchen at the same time. Be wary and know you DON'T need to agree to this. If you just want an assessment, you're allowed to get just that.
Assessors sign up to a code of practice, where they won't cross-sell if you don't want them to. They should tell you if they get commission from providers for recommending certain products in the assessment.
I can't afford the assessment - what do I do?
If you can't afford the upfront cost of the assessment, and can't get it for free from one of the other sources here, call the Energy Saving Trust on 0300 123 1234 (calls charged at national rate). It will tell you if you're eligible under Energy Company Obligations for any free assistance without going through the Green Deal scheme.
How do I find a good Green Deal assessor?
All assessors do the official training before they can inspect homes for energy-efficiency improvements. Check that they have the Green Deal Quality Mark.
The best way to check an assessor is to quiz them over the phone before booking. See how knowledgeable they sound about the Green Deal, and ask how many assessments they've done. Chat to a few and go with your instinct.
Around 210,000 assessments have been carried out since the start of the scheme, so most assessors should be experienced.
An assessor's just cold-called me. Is this legit?
We've had reports of some people being called up out of the blue and given the spiel about how much they can save on their energy bills, then asked for £300 for someone to come round and do an assessment.
Most assessors charge less than £150, so £300 is high. Don't be pressured into signing up to anything or paying any money upfront if you're unsure.
Let us know what you think. Will you be doing the Green Deal? If not, why not? Discuss The Green Deal.
The Green Deal Home Improvement Fund is to give out an extra £100m for insulation, double-glazing and more - after closing suddenly in July
In June a new 'Home Improvement Fund' element was added to the Green Deal to try and kickstart the scheme. It was massively popular - as it offered cash handouts of £1,000s to help you improve your home - and the money ran out at speed.
The sudden closure in July was handled badly and we kicked up a fuss. Now the Government's putting another £100m in, and you should be able to apply soon.
Full details aren't out yet (we'll let you know when they are), but we expect it won't be as juicy as before - previously you could get up to £7,600. We expect the structure will be similar but with lesser amounts. Applications are due to open before the end of November, though an exact date is yet to be announced (see the Green Deal fund to reopen with an extra £100m MSE news story).
Click to see full details of what was on offer before the fund shut
Offer 1: Install two or more of 12 'main' energy saving measures, and get up to £1,000.
This offer included cavity wall insulation, boiler upgrades, double glazing, flat roof insulation and more.
Provided your costs to install the two measures were £1,000 or less, you got the full whack back in funding. If, say, your costs were £800, then that's what you got back. The maximum GDHIF payout was £1,000, so if your improvement costs totalled £3,000, you only got a third of the costs back.
Click to see a full list of the energy saving measures which qualified for the £1,000 funding
The 12 home improvement measures included in this scheme:
Full list of cashback on offer Improvement ImprovementCondensing mains gas boiler Cavity wall insulationFan-assisted storage heaters Flue gas heat recovery Replacement warm-air unit Waste water heat recoveryFloor insulationRoom-in-roof insulationDouble/triple glazing (replacing single)Flat roof insulationSecondary glazingEnergy-efficient replacement doors
Offer 2: Install solid wall insulation and get up to £6,000 back.
Around 6.6 million homes in the UK have solid walls (as opposed to cavity walls). Solid wall insulation can be expensive, with quotes often ranging from £4,000 to £14,000. Funding was available for 75% of what you paid, up to a maximum of £8,000.
Solid wall insulation can save you up to £460 on your energy bills each year.
The offer applied to both internal and external solid wall insulation measures. MSE Wendy took advantage at the time: "I'm getting 50m² of solid wall worth £7,100, but I only need to shell out £1,750." (She needed to pay £300ish upfront, and a further £1,450 on Green Deal finance; her Green Deal Home Improvement Fund cash was a massive £5,350!).
'Add-on' offer 3: Get £100 of your assessment cost refunded.
Pretty straightforward, this one. If improvements were made qualifying you for offer 1 or offer 2 above, you could apply to get up to £100 of your assessment costs refunded (so, the vast majority of the costs).
'Add-on' offer 4: A £500 bonus if you improve a home bought in the past year.
If you'd bought a home in the past 12 months, and chosen to make it more energy-efficient under the Green Deal, then there was an extra £500 to help.
You could have qualified for this £500 if you had installed one of the measures in offer 1, or solid wall insulation under offer 2.
Of course, there was the risk you'd pay for the assessment and not qualify for any work eligble for GDHIF funding, so there'd be a net cost, but at that point, you could decide to go ahead anyway - you'd still have a warmer home.
Already paid for an assessment? You CAN still apply. The closure of the fund was a shambles, as many paid upfront for assessments to do this, then weren't able to apply for the cash (see the Green Deal 'shambles' MSE news story). We campaigned (and Martin ranted on TV & radio) about this and asked the Government to re-open it.
The good news is those assessments are valid for two years, so if you had one done, you can use it to apply when the fund re-opens.
The people who'll benefit most from the Green Deal are higher users who live in cold houses and worry about turning the heating up
Sadly, many people feel squeezed by heating costs, and cannot afford the simple home improvements needed to cut their fuel bills.
If you live in a chilly house and worry about bills, it's worth considering. It should help you turn up the heat at less cost, or turn on the heat without panicking about the wallet impact. And because you'll use less energy, you'll be less impacted by future price rises.
The Green Deal could also work for you if you're a high user already because then the likely savings you'll make from the improvements will outweigh your repayments and generate cash for you. Repayments are based on average use, so if you use more, your savings are likely to be bigger than your repayments.
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The loan is attached to the home, not you. If you move, the next owner pays.
The loan is attached to your home's electricity bill, not you. So if you sell or rent it out, the new occupiers will make the Green Deal payments through their bills, in exactly the same way as you do.
What will this do to my house price?
It's still unclear. The Green Deal finance scheme is still in its early stages, so there've been only around 2,000 loans granted. It's unlikely that anyone who has taken the finance has tried to sell their home since the scheme started.
However, Government research has shown that, for example, a home with a B energy efficiency rating fetches an average of £16,000 more than one with a D rating. It's likely double glazing and new boilers are top of many homebuyers' wishlists.
Yet there is always the chance being tied to a 'loan' could frighten some. It may become a trend that people ask sellers to reduce the price of the property by the remaining cost of the loan, or pay the loan off in full.
We asked an estate agent for their view of what buyers might think. Paul Masters, director at Kinleigh Folkard & Hayward, said:
"Eco-conscious buyers may welcome energy-saving improvements and not worry about taking over the loan. But those who are already worried about loan repayments and getting a mortgage may be completely turned off and prefer to buy a property without it."
When the scheme was launched, these loans came with early repayment charges, as you'd see on a mortgage. But, from May 2014, these have been dropped, so future loans can be paid off without penalty.
I'm selling my house. How will buyers know I have the Green Deal?
If you're selling up, details of the Green Deal repayments will automatically appear on the Energy Performance Certificate or, in Scotland, the Energy Report within the Home Report. One of these is needed for every house sale.
Property owners must make potential buyers aware that Green Deal repayments are attached to the house, at the latest before the seller accepts an offer. If the buyer agrees, the seller needs to get an agreement (that the seller will take over the loan) in writing.
If you've got the upfront cash, you can still get the Green Deal without the loan, including 'cashback'. This can be bonza
The loan is designed to help people who don't have the upfront cash to pay for improvements. Green Deal loans run for decades, and the interest costs can soon mount up. If you can pay upfront, you can avoid interest costs and bag the savings yourself.
Overall, it's almost certainly likely to work out better for you if you pay upfront (especially considering poor savings rates right now). But make sure you've done the maths - are you better off going through the Green Deal (with funding contribution, if applicable, minus cost of assessment) than you would be doing the measure outside of the Green Deal?
If you do decide to do the work through a Greeen Deal provider, make sure you're not overpaying. You've still a got right to haggle with your Green Deal provider, as you would with any other tradespeople.
We've worked up an example of how you could benefit from Green Deal Home Improvement Funding while paying upfront for cavity wall insulation and a boiler upgrade, and compared it to getting Green Deal finance.
Paying upfront vs getting Green Deal finance (over 20 years)
|Paying upfront||Borrowing the cash|
|Cost of boiler, insulation and labour||£2,500||£2,500 (plus £63 admin fee)|
|Length of time to pay off||-||20 years|
|Predicted saving from lower bills*||£5,280||£5,280|
|Total saved over 20 years||£2,780||£0|
|*Assumes savings and repayments are both £22/mth|
Don't let the huge numbers put you off unnecessarily
Talk of "borrowing £2,500 and repaying £5,300" may seem very scary. Yet again, it's important to remember, even with this, the whole point is you should not end up paying more than you do now, because the reduction in your energy bill will cover the repayments.
You're also lessening the impact of future energy price rises. Suppose you use 3,300kWh of electricity. You then make Green Deal energy efficiency improvements, meaning you use 15% less electricity - 2,805kWh. If prices rise, you're less affected as you use less energy.
It's also worth noting that, assuming we have overall inflation over the next 20 years, the actual cost to you of repayments is less. As inflation rises, the value of money diminishes, so £1,000 in 20 years' time will buy less than £1,000 now. This diminishes the cost of borrowing – to an extent.
I don't have the cash upfront, but want to pay off quicker. Can I use other credit?
Let's take the example above - spending £2,500 on a new boiler & cavity wall insulation.
If you can pay off quickly, you could use a 0% spending credit card and never pay any interest, just like stumping up the cash upfront. You get up to a year and a half to pay it off without paying interest.
If you need longer, then you could get a 0% balance transfer card when your interest-free purchases period runs out on the first card, and get up to 33 more months interest-free to pay it off. You'' have to pay a fee of about 3% on the balance transferred to do so.
The other option is to get a bank loan. The best buy for a loan of £2,500 is 8% representative APR - which is a similar interest rate to Green Deal finance. However, because you're paying it off quicker, you still pay less in interest over the total term.
Using high street credit can be risky. Firstly, all will do a credit check, and will score more harshly than Green Deal providers, so it's not certain you'll be able to access the best deals.
Secondly, if you're not extremely organised with money, you can end up paying representative APRs of up to 20% on these credit cards. Always stick to the terms and conditions in the credit agreement, or special 0% rates can be withdrawn.
And finally, energy suppliers have to go through several processes to work out payment schedules with you if you get into debt with them. High Street lenders are under no such requirements, so you could find yourself facing debt collectors if you default.
However, if you're money-savvy and trust your ability to make payments on time, this can be a good way to pay off the home improvement more quickly, and start seeing evidence of energy saving in your pocket within a few years.
High Street borrowing vs getting Green Deal finance (over 20 years)
|0% purchase card + 0% transfer card (1)||Borrowing Green Deal cash|
|Cost of boiler, cavity wall ins and labour||£2,500||£2,500 (plus £63 admin fee)|
|Length of time to pay off||4 years 2 months||20 years|
|Predicted saving from lower bills*||£5,280||£5,280|
|Total saved over 20 years||£2,545||£0|
|*Assumes savings and repayments are both £22/mth. (1) Assumes 18mths 0% purchase card and 32mths 0% balance transfer card (3% transfer fee). (2) Average repayment - minimum payments on the full amount at the start will be higher.|
Should I extend my mortgage to make home improvements?
Borrowing more on your mortgage is another way to finance home improvements and one you need to think carefully about. If you've decent amounts of equity in the property then it's likely you can get the funding.
Work out how much it will cost you. Our mortgage calculator allows you to compare two different mortgages - so you can enter the higher level of borrowing and work out the additional cost over the remaining term of the mortgage.
The crucial question is: will you pay more than you would under the Green Deal over the different payment periods?
Most lenders are open to you raising extra money on your mortgage for home improvements, but do check what deal it will be on - it won't necessarily be the same deal your mortgage is on, especially if you have a fix. It's likely you could be on the lender's standard variable rate for the additional borrowing.
Nationwide Building Society has a selection of Green Additional Borrowing products for existing mortgage customers wanting to make home improvements. These products are discounted by 0.5% from standard fixed rates and have no product fees.
But there are limits which you wouldn't face from other lenders. Nationwide says borrowing must go on home improvements, but the list of improvements qualifying for the discount is smaller than that available under the Green Deal.
You need to think carefully before taking on additional borrowing, especially if it's secured debt where you could lose the property if you don't keep up repayments. Check that the extra repayments don't make the mortgage(s) unaffordable - and whether that would still be the case if your interest rate was to rise.
You borrow over the long term (10–25 years), and there is interest attached
If you choose to get a Green Deal loan, the effective minimum repayment period is 10 years, the maximum 25. The exact length depends on the energy-efficiency improvements you choose.
This is unsecured borrowing (better than secured).
When you get a loan from a Green Deal provider, you also sign an agreement for unsecured finance. That's better than secured, where they can take your house if you don't repay – here, they can't.
The interest varies depending on the amount and length of the loan, so check.
Providers charge interest on Green Deal loans. Your Green Deal provider will set up a plan with you, though this will need to be approved by the Green Deal Finance Company - a central body set up to access the money markets and provide cash for the loans.
The Green Deal Finance Company charges Green Deal providers 6.96% interest to borrow cash from it. They also charge a set-up fee of £63, and an annual charge of £20 per loan which is usually passed on and is the reason the APR (total cost of credit) that you face varies depending on the length of the loan and amount you borrow.
Here are some examples of how much you could repay for different improvements (though the Green Deal Finance Company won't do finance plans for less than £500, so the first two are just for illustration):
You can pay Green Deal loans early without penalty.
When the scheme was first set up, there were early repayment charges associated with loans that ran for 15 years or more.
But the Green Deal Finance Company scrapped these in May 2014, meaning any loan taken out after that date, for any length of time, won't have these charges.
If you're one of the 2,000 or so people who took out a loan before May 2014, then as these early repayment charges are in your contract with your Green Deal provider, you may still have to pay them if you chose to repay early.
But the Green Deal Finance Company has said it'll encourage providers not to enforce these charges on anyone repaying early.
Loft insulation (three-bed semi)
|Cost of work||£350|
|Predicted annual saving||£150|
|Typical payback time||10 years|
|Monthly repayment (added to electric bill)||£4.50|
|Total interest cost||£185|
|You save each year||£100|
Cavity wall insulation (three-bed semi)
|Cost of work||£500|
|Predicted annual saving||£145|
|Typical finance payback time||10 years|
|Monthly repayment (added to electric bill)||£7|
|Total interest cost||£325|
|You save each year||£60|
And one improvement that won't fully pay for itself...
New boiler (three-bed semi)
|Cost of work||£2,500 (plus £63 admin fee)|
|Predicted annual saving||£200|
|Amount of finance borrowed||£1,363|
|Your upfront payment at start||£1,200|
|Typical finance payback time||12 years|
|Monthly repayment (added to electric bill)||£15|
|Total interest cost||£870|
|You save each year||£10 (until repaid)|
The Green Deal won't cover pricier repayments' entire cost - you may have to stump up some cash upfront
If an improvement won't pay for itself in energy savings over 10 to 25 years, then you can't borrow the full amount through the scheme. So you'll have to stump up any remainder. Improvements that fully pay for themselves are denoted by a green tick on your assessment, those that only partially do have an orange tick.
Typical areas where you may have to pay
If you go for one of the pricier improvements allowed under the Green Deal – such as solid wall insulation, costing £10,000 or more – the energy you save over 25 years is unlikely to cover the cost.
This is also likely to apply other more expensive improvements, such as new boilers, double glazing, solar panels, replacement storage heaters and under-floor insulation.
Here, you can only borrow the amount you would save on your bills, and must cough up the rest yourself. So carefully work out if you can afford it beforehand.
There may be help
However, you can be clever here. If you combine a low-cost, high-impact improvement (eg, loft insulation), with a high-cost, average-impact improvement, (eg, boiler), you may be able to use the savings from one to pay for the other. See combining improvements for more.
On a low income, in receipt of benefits? You may be entitled to free cash rather than a loan
You don't always need to borrow. Launched alongside the Green Deal is the Energy Company Obligations (Eco) scheme. This gives grants to help low-income households, people living in older properties and low-income communities.
However, we're hearing there are problems with Eco subsidies, with providers cancelling arranged installations and putting off new customers - so this funding isn't guaranteed. If you've tried to access it, let us know your experience in the discussion forum.
The big six energy suppliers (British Gas, EDF Energy, E.on, Npower, Scottish Power and Scottish & Southern) have obligations to help customers by providing cash to help them insulate and better heat their homes.
Don't worry if you're not with the big six. This isn't just about suppliers helping their own customers - these big beasts just need to put money into the system. Green Deal providers can then bid for it, and use it to help any of their customers who are eligible.
Our Free Insulation & Boilers guide has full information, including eligibility criteria, for free energy-saving home improvements.
Who's eligible for assistance?
If you earn less than £16,000 household income and own your home, you're likely to be eligible for help. The amount you're eligible for is means tested. You're likely to get higher amounts if there are ill or disabled people, children or older people living there.
For more info on help with costs and how to apply outside of the Green Deal, call:
- The Energy Saving Advice Service (England & Wales): 0300 123 1234
- Home Energy Scotland: 0808 808 2282
How to get assistance under the Green Deal
If you think you're eligible for help, and you want to take part in the Green Deal, discuss this when you get your home assessed for Green Deal improvements.
Talk to your chosen Green Deal provider when you agree a plan. They will contact the energy companies for you, access any discounts you're eligible for, and take this off the total cost of your plan. Ask the provider if they have Eco funding available - it's becoming rarer that many do.
Who is eligible for Eco subsidies?
There's potentially wads of free cash on offer to people on certain benefits to install free loft or cavity wall insulation, plus help to pay for boiler repairs, or a new boiler.
For example, someone living in a private home on Income Support could be eligible for Government help to pay energy bills during winter, plus the following help from energy companies:
Renewable Heat Premium Payments of between £300 and £1,250 to install solar, biomass or wind technology
Energy Company Obligations, consisting of:
Affordable Warmth Obligation. This helps with heating and insulation (boiler subsidies, loft insulation etc).
Carbon Saving Obligation. Subsidies for hard-to-treat homes - solid or cavity wall insulation.
Carbon Saving Communities Obligation. Subsidies for the poorest 15% of communities (some of this subsidy cash is reserved for rural areas).
|Private tenant on income- related benefits||Living in rural social housing & on benefits||Living in a low income community||Living in an older home||Anyone else|
|Cavity wall insulation||Yes||Yes||Yes||Yes||Yes (if hard to treat)|
|External/solid wall insulation||Yes||Yes||Yes||Yes||Yes|
Everyone gets up to £6,000 to help with the costs of solid wall insulation
Some 6.6 million homes in Britain – that’s almost one in three – were built with solid rather then cavity walls. Unfortunately solid walls are much more expensive to insulate – but the good news is that anyone with solid walls is potentially eligible for grants worth £1,000s.
Solid walls are hard to insulate as, you need to add material either to the outside or the inside of a wall. It also costs a lot, from £4,000 for internal solid wall insulation and up to as much as £16,000 for external solid wall insulation.
Getting internal solid wall insulation means sacrificing some room space. It can be done by building a fake wall and filling in the gap with insulating mineral wool, or installing insulation boards directly onto the walls. You'll need to remove anything attached to the wall, such as the radiator, or skirting boards - plus ensure it's free of damp.
External solid wall insulation is done differently. A layer of insulation material is fixed to the existing walls, and then covered with protective cladding/render, which you can paint, add brick slips to, or even pebble-dash!
Because this changes the external appearance of your home, you'll need to find out from your local planning authority whether you need permission, and, again, you'll need to sort out any damp you have.
Because both types of solid wall insulation are so expensive, there's some help on offer to assist you with the costs. There's now one route you can go down for help (there were two when the Green Deal fund was open):
As you read above, the big six energy companies have obligations to provide assistance to people trying to make their homes more energy-efficient.
Although much of this cash will go to low-income households for new boilers & insulation, there's also help available for anyone wanting solid wall insulation.
To find out what help you might be eligible for under Eco, talk to your assessor when they come round (assuming they recommend your home is suitable for solid wall insulation) or call The Energy Saving Advice Service (England & Wales) on 0300 123 1234 or Home Energy Scotland on 0808 808 2282.
If the savings you're predicted to make don't happen, you could pay more than you actually save
This is a slight wobbler. I wouldn't let it put you off too much, but it is a risk that needs thinking through.
Throughout this guide, we've written "you only repay what you should save", yet technically, that's not always true. The actual savings need to match up with your total repayments.
Imagine Ima MoneySaver is a very low energy user living alone in a large house. If she got a new boiler, the average saving for a home of her type is £190 per year, so this is the figure used to set her repayments. She will pay back £16 a month until both the loan and interest is paid.
However, she's a low user, and that isn't factored in (it's about the home, not the user, as if she moved the next tenant may be a high user). So she might only save £10 a month, because she uses less energy than the average. Therefore there would be a genuine net cost.
Having said that, in time the saving should grow, simply because energy bills are rising so rapidly. If the saving stays at the same proportion, the cash amount would rise, so in a few years' time, she's likely to be saving as much as her repayments, and after that may even make savings over and above her repayments.
All Green Deal assessors will ask to see your energy bills, classify you as a low, medium or high user, and predict your true savings. Your advice report will spell out if it's a good deal for you. Use these figures to work out if it's the right time to make home improvements.
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Get at least three quotes for the work and don't be afraid to haggle (you only need one assessment)
Picking a provider can be tricky. You don't need to get the work done by the same company that did the assessment. Many assessors and installers are salesmen - Green Deal double-glazing is still double-glazing!
Get at least three quotes
Once you've got your advice report, that's your assessment done. So now get quotes from at least three Green Deal providers. They will quote for the work and devise a repayment plan (if you don't want to pay upfront).
Never be pressured into signing anything without getting other quotes first.
Don't be afraid to haggle
The installation and fitting industry has often operated by giving sky-high quotes to people, hoping they'll accept them, but being ready to knock them down if they become customers. We've heard of people being quoted £15,000 for double-glazing but eventually getting it for £2,000 – showing the scale of the discounts.
So far the Green Deal is too new for us to know how it will go, but don't be afraid to haggle (please report your Green Deal haggling experiences).
Because this is a scheme based on the market, there are no Government rules on how much things should cost. So, as with any other home improvement, do some research to find out how much you should be paying, then compare quotes.
If you've agreed finance, you don't pay your installer anything
Once you've agreed on a quote, your provider will appoint an installer to do the work agreed under your plan. The whole idea of the Green Deal is that you can make improvements with no upfront cost.
So, any Green Deal installer who tries to charge you anything when they do the work is wrong. It's worth checking when they arrive at your home that they're aware of the payment arrangements, and contacting your plan provider if there's a problem.
Combining improvements can, bizarrely, make Green Deal loans more affordable
The most important thing to understand on this is that you cannot borrow more under the Green Deal loan than what your energy savings will allow you to repay.
Even though you repay the bill through your electricity provider, you are still free to switch provider to cut costs
Repayments are taken from your electricity bill (because not everyone has gas) and will be shown on your statement. Your electricity supplier will repay your loan for you to the company who installed your Green Deal measures to pay off your finance.
Once a year, you'll receive a Green Deal statement from your provider that shows how much you've paid, and how much you still owe. Therefore, you're never shelling any separate cash out (apart from for your electricity bill, obviously).
Yet you are still free to switch
Don't, for heaven's sake, think this locks you into your energy provider so you can't get cheaper bills (join the MSE Cheap Energy Club to stick on permanently low prices).
Provided the energy company is a member of the Green Deal scheme, which all the big six - British Gas, EDF Energy, E.on, Npower, Scottish Power, Scottish & Southern - are, then you are free to move.
Switching will work no differently than it does now. There's a central Green Deal Plan register, which means energy companies know if you've got a Green Deal Plan when you switch.
If it breaks after the warranty runs out, you may still have to repay
Most Green Deal equipment comes with a five-year warranty for the equipment, and 10 years' warranty for any building damage caused by the installation. Cavity and solid wall insulation have a full 25-year warranty.
Many Green Deal improvements have extremely lengthy repayment periods. So if your new boiler breaks in year eight, its warranty will have expired. You'll need to pay to fix it, but you'll also still have to pay your Green Deal provider each month.
Some Green Deal Plans require you to get annual services on the improvements or risk invalidating the warranty – another thing to check when agreeing a plan. This is a good thing because you'll still have a warranty, but the service will probably cost you.
The Green Deal has STRONG consumer protection rules. If you're given the wrong advice, take it to the Ombudsman
There's a lot of consumer protection around the Green Deal. Green Deal providers, assessors and installers have all signed up to a Code of Practice, and all Green Deal home improvements should have the Green Deal Quality Mark.
Green Deal assessments in your home are covered by door-to-door selling regulations, which mean you have seven days to change your mind. Even so, NEVER, EVER sign up to anything on the spot - take your time to think about it.
Some installations may need additional work - eg if you're getting underfloor heating, you may need a joiner to take up/replace the floor, as well as a heating engineer to install the heating pipes or electricals.
The Green Deal Code of Practice requires that any other tradesmen involved who aren't Green Deal Installers are members of other schemes, such as TrustMark.
How to complain
Various ombudsmen and regulatory agencies deal with complaints, though your first port of call should be your provider. If they can't resolve your complaint, contact the Green Deal Ombudsman or, in specific cases, other bodies:
Problems with the Green Deal:
You can complain to the Green Deal Ombudsman or call on 01925 530 263.
The Ombudsman has the power to investigate complaints and decide whether to take action. It can require energy companies to remove charges, or provide a service. They can force providers to give an apologies or explain, and, if appropriate, give up to £25,000 compensation.
If you accept the Ombudsman's decision, it's binding on you and the company. If you don't accept it, you're free to pursue other redress, for example, through the courts.
If a service was mis-described, you may want to get your local Trading Standards Institute involved.
Problems with energy companies:
You can report the energy company to its regulator, Ofgem. It builds cases against energy companies, and fines them for large-scale mis-selling or unfair relationships. If you have a specific complaint, it's best to go to the Green Deal Ombudsman above.
Problems with your Green Deal finance contract:
If your complaint directly regards the Consumer Credit Act, rather than a company's conduct, you need to seek help from the Financial Ombudsman Service or call it on 0800 023 4567.
However, if your complaint is regarding how your repayments are being taken, for example, you should go to the Green Deal Ombudsman.
The Green Deal's a big move. First ensure you're on the cheapest energy tariff and do the energy-saving basics
Ditch and switch energy provider and you can £100s a year. Our Cheap Energy Club checks you're on the cheapest deal and handles the switch for you. Plus to encourage you, there's usually up to £30 extra if you switch via the club.
It's the same gas, the same electricity, the same safety. All that changes are the customer service and the price you pay.
And every month, without you doing anything, we do a comparison for you, and alert you when it's worth switching again.
Once you've switched, if you wander round the house in boxers or bra 'n' knickers with radiators on full and windows wide open... STOP IT!
Sensible changes can save your large, from draft excluders to setting washing machines to 30°C and low-energy light bulbs to notching down the thermostat. Try the Energy Saving Trust for more energy-saving tips.
Martin's final thought - is it worth it?
That's the mythbusters done, so hopefully you now understand how the scheme works.
Deciding whether it's right for you depends on your home and finances. From a purely financial perspective, provided the work qualifies for full financing, it seems a good bet for those keen to improve their pads who can't afford to shell out upfront for major improvements.
The simple reason for this is that your home will be a nicer, warmer place to live in, even though you won't have to pay out any more than you do now. But if you can afford to shell out upfront, then it's likely better to do this, so you don't pay any interest costs.
For smaller improvements the assessment's cost is proportionately larger, so needs factoring in more. Though, right now, with cashback on top, that should be more than covered, making that simple too.
Those are the easy bits though. This is a new-ish scheme and there are still many unknowns, even though we're now almost two years in. We don't know what impact this'll have on house prices, for example. So there is still an element of a gamble.
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