Monday, July 4, 2011

Alternate finance model - encouraging green outcomes

I heard a suggestion the other day that would implement a completely different model of borrowing money from financial organisations, with the aim of achieving more sustainable housing options for individuals. The idea was that financial institutions offer low interest rate and very long-term (60+ years) home loans/support loans to be utilised to finance sustainable technologies and practices. 

You would be able to obtain a low interest and long term loan for things such as photovoltaic cells (solar panels), water tanks, insulation, etc and then for the traditional building materials and methods you would attract the normal home loan rate and term. Thereby ending up with two home loan products on your property. 

As you are unlikely to live for the  length of your long-term loan period that loan is actually attached to the title of the property and that loan would transfer to the new owners when you or someone on your behalf sells the property.  

Such loans would make the investment into alternative and sustainable technologies more affordable with recognition that the practicalities of investing in good technology can potentially be expensive for individuals, particularly for some of these emerging technologies. Such loans would encourage personal investment in sustainable housing options and technologies, with the incentive of long-term and low interest rates but would also mean such technologies over time would become cheaper and more efficient with increased investment in research and delivery of these technologies. Win-win situation.

What a brilliant and alternate model to imagine! If there are any bankers listening, perhaps a model to try?
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