Green and Ethical Lending: 3 Benefits You Should Consider

The demand for green loans, sustainable financing, and ethical lending in Australia are becoming increasingly commonplace. Australians are becoming aware of the effects of climate change on Australia’s environment, with increasing rates of bushfires, droughts, and flash flooding, which are having a large effect on our ecosystems. Australians are also attempting to reduce their carbon emissions and energy consumption, as the rise of inflation has caused individuals to rethink their spending habits. 

Ultimately, where you choose to put your money matters. Knowing what lenders are investing in is important for some borrowers, as well as understanding the incentives that lenders are providing for opting for greener solutions. Our Property and Finance experts have outlined what green and ethical lending could mean to borrowers, and why it’s helping our customers save on expenses and become more environmental and sustainable.  

What is Green Lending?

Lenders are now offering green loans. These loans help borrowers finance the purchase and installation of environmentally friendly and green products in their homes. These home products and upgrades aim to reduce CO2 emissions and contribute to a green transition in society, and include things like solar panels, solar hot water systems, battery packs, electrical vehicles, and other eligible clean energy products. The aim of green lending is to encourage more sustainable and environmentally friendly actions from borrowers, to enable individuals to make a positive contribution to Australia’s environment.

What is Ethical Lending?

Ethical lending is different to green lending. An ethical lender is one that is socially conscious and environmentally friendly in their practices. Banks use your funds in various ways, including investing into industries considered to be highly profitable. As a result, where banks are investing their money, might not necessarily line up with your ethical practices. Therefore, understanding where your lender is investing money is important to consider when trying to borrow sustainably.

For example, in Australia, many banks are lending billions of dollars to the fossil fuel industry. Essentially, this means that your money may be supporting activities that are contributing to climate change and could have a negative impact on Australia’s environment. Fossil fuels have a harmful impact on the amount of carbon dioxide in the atmosphere, which causes alarming rises in temperature, larger risks of bushfires, and extreme weather patterns. If you’re opting to borrow from an ethical lender, Vision can help you.    

Why Do Customers Want Green Loans and Ethical Lenders?

Lenders that offer green loans often provide an incentive for customers to switch to more efficient and environmentally friendly products. Such incentives include: 

• Low fixed rates for opting for green loans, 
• No establishment or monthly loan servicing fees, 
• Flexibility to make additional repayments with no early repayment charges, 
• Reimbursements of annual fees, and
• Cash back rebates. 

Consumers are also opting for banks that don’t fund fossil fuel projects, and here is why: 

• By choosing a bank that doesn’t fund the fossil fuels industry, you are sending a strong message to other lenders that still do, about the world and the climate you want to live in. 
• Renewable energy is growing in Australia. By encouraging Australian banks to reconsider their lending practices, Australia can transition towards renewable energy sources.

Why Should You Consider Green Loans and Ethical Lending?

1) Save On Living Expenses

With the cost of living and inflation rate rising, people are looking for new ways to save on living expenses. By accessing green loans to install energy-efficient features in your home, you can save money on your power bills, whilst making a positive impact on the environment. Renewable energy sources, particularly solar panels, are eco-friendly alternatives to help you towards your savings goals.

2) Lenders Reward Their Borrowers

Some lenders are rewarding borrowers who are moving into greener living by offering them discounts for living in energy-efficient houses. For example, some lenders may offer an ultra-low, secured fixed rate loan with no establishment fees, monthly loan service fees, or early repayment fees. If these rewards interest you, Vision can help you find the right lender.

3) Promotes Sustainability and Environmental Responsibility

Green loans allow borrowers to become environmentally conscious and help them have a positive difference towards climate change, by utilising renewable energy and cutting their greenhouse gas emissions. Research has shown that environmentally friendly actions improve feelings of wellbeing, and adopting a greener lifestyle boosts happiness. Without implementing environmental action, Australia will continue to see projections of frequent hot days, a significant rise in sea levels, and extreme rainfall events.

What Other Types of Green Loans Are There?

Green car loans are also available to borrowers. These loans assist individuals with the purchase of fuel-efficient vehicles and tend to offer cheaper interest rates and lower fees compared to standard car loans. Cars account for over 11% of all greenhouse gas emissions in Australia. Accessing a green car loan assists you in purchasing an electric or hybrid car whilst helping you lower emissions and make a positive difference towards climate change.

With the rise of inflation and the increasing costs of living, green car loans also help you save on fundamental expenses. Green car loans often provide a fixed rate for the life of the loan, extra flexibility of repayments, removal of fees, and other cash discounts. Fuel-efficient cars also help you save on fuel, with current fuel prices continuing to increase, causing many a hole in their pockets.

How Vision Can Help

Vision’s experienced Mortgage Brokers are focused on identifying and achieving your lending needs. Consulting with our award-winning property and finance team can help you determine which green loan is best for you, from green mortgages and green personal loans, to green car loans too. Contact us today.