The government’s Green Deal scheme has been created to enable people to make their homes more energy efficient. The idea is the money for the improvements is loaned to homeowners and paid back over a period of time. According to the scheme and the so called Golden Rule, the idea is the only permitted improvements on the scheme will be those that will save more money than the amount paid out in repayments each month.
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However the Green Deal loans come with interest rates attached, and Npower warns scheme’s interest rates are too high. Furthermore, it seems this point of view is shared by lots of other people, and it brings into question whether the Green Deal will be as successful as the government hopes it will be.
Interest rates for Green Deal
The news broke at the end of January, when Npower made it clear it believed the amount of interest homeowners would have to pay on these loans was excessive. The current rate stated for the scheme is above 7%.
The government’s scheme states that the only situation in which improvements would be approved under the scheme is if they will save the homeowner money. For example if improvements were calculated to be repaid at the amount of £50 per month but they would only generate £30 per month in savings, they would not be permitted. It is only in situations where the savings outweigh the cost of improvements that the Green Deal scheme would be applied or offered to the homeowner.
Are interest rates too high?
The idea behind the Green Deal is deemed to be a good one. However the current economy has led to many homeowners struggling to make ends meet. Therefore the idea of getting yet another loan is questionable for many.
Npower believes that this deal will only be a success if it is offered with exceptionally good interest rates. The current rates could be anything between 7% and nearly 11%, depending on how long the homeowner would have the loan for. Clearly this can have a significant effect on the amount of money to be paid back.
This, along with the fact that potential energy savings delivered by the improvements can only be estimated, means you must be sure you are getting the best possible deal. And as Npower has pointed out, interest rates that are this high do not represent a good deal for many people who are trying to make ends meet as it stands.
If you are considering getting involved in the Green Deal, make sure you consider what the assessment reveals about your home prior to making any decisions about whether or not to go ahead. Furthermore, ensure you go through the numbers so you can see what you would be paying back each month. If you do this and you consider whether or not you want to be paying this interest rate, you can act from a position of knowledge.