Are you dreaming of owning an eco-friendly home that not only saves you money but also helps protect the environment? Why don’t you consider opting for Green Home Loans? Embrace sustainable living and enjoy financial perks that make going green easier than ever.
What are Green Home Loans?
Green Home Loans are specialized financing options designed to encourage and support the purchase, construction, or renovation of eco-friendly and energy-efficient homes.
These loans typically offer favorable terms such as lower interest rates, reduced fees, or additional incentives to promote sustainable living.
Key Features
- Support for Sustainable Projects: Funds can be used for installing renewable energy systems (like solar panels), enhancing insulation, upgrading to energy-efficient appliances, and implementing other eco-friendly features.
- Financial Benefits: Borrowers may receive incentives such as tax credits, rebates, or discounts, making sustainable homeownership more affordable.
- Environmental Impact: By facilitating the development of green homes, these loans contribute to reducing carbon footprints, conserving natural resources, and promoting overall environmental sustainability.
Also Read: Home Loans in Bangalore
Eligibility Criteria for Green Home Loans
| Criteria | Requirement |
|---|---|
| Work Profile | Salaried employees Self-employed professionals Self-employed non professionals Farmers / Agriculturists |
| Purpose | Ideal for buying residential flats, villas, or row houses. Covers both under-construction and ready-built properties. Applicable only to certified green housing projects offered by accredited builders, developers, societies, or development authorities. Allows you to take over existing housing loans from other banks or housing financial institutions. The original loan must have been taken for a certified green housing project. |
| Nationality | Indian Residents NRIs POIs |
| Credit Score | 700+ |
Check Out: Home Loan Eligibility Calculator
Is Your Dream Home Eligible For a Green Home Loan?
To be eligible under the this scheme, housing projects must be certified or rated by approved agencies. The approved certifications include:
| Certification Category | Requirement |
|---|---|
| Leadership in Energy and Environmental Design (LEED) from LEED India | Projects can be certified under the following LEED levels: LEED® Certified Silver Level Gold Level Platinum Level |
| India Green Building Council (IGBC) | Certification levels offered by IGBC include: Certified – Best Practices Silver – Outstanding Performance Gold – National Excellence Platinum – Global Leadership |
| TERI-GRIHA (Green Rating for Integrated Habitat Assessment) from TERI-BCSD India | Housing projects can be rated on the following levels based on the GRIHA rating: 1 Star 2 Star 3 Star 4 Star 5 Star |
Top Banks Offering Green Home Loans
With the growing emphasis on environmental sustainability, many leading banks are now offering Green Home Loans to encourage eco-friendly homeownership and renovations.
Maha Super Green Housing Loan Scheme by Bank of Maharashtra
The Maha Super Green Housing Loan Scheme by Bank of Maharashtra is a specialized loan product designed to promote eco-friendly and sustainable housing.
| Category | Details |
|---|---|
| No Processing Fees | Zero processing fees under the scheme. |
| Interest Rate Concession | 0.10% concession on applicable interest rates (subject to the minimum floor rate). |
| Quick Sanction | Faster approval for approved green projects. |
SBI Surya Ghar – Loan For Solar Roof Top
The SBI Surya Ghar – Loan for Solar Roof Top is a financing scheme designed to promote the installation of solar rooftop systems in residential homes, making clean and renewable energy more accessible.
| Category | Details |
|---|---|
| Loan Amount | Ranges from Rs. 2 lakhs to Rs. 6 lakhs. |
| System Installation | Capacity ranges from 3 KW – 10 KW. |
| Margin Requirement | Minimum 20% of the cost of the property. |
| Maximum Tenure | Up to 120 months (10 years), excluding the moratorium period. |
| Processing Fees | Zero processing fees. |
| Rate of Interest | Home loan customers: 9.15% Non-home loan customers: 10.1% |
Union Green Home
Union Green Home by Union Bank of India offers specialized home loans for eco-friendly housing projects certified by the Indian Green Building Council (IGBC), promoting sustainable living. These loans provide financial benefits to homeowners incorporating energy-efficient and environmentally friendly features into their properties.
| Category | Details |
|---|---|
| Certification Requirement | Housing projects must be certified/rated by the Indian Green Building Council (IGBC) or other approved rating agencies. |
| IGBC Certification Levels | Certified – Best practices Silver – Outstanding performance Gold – National Excellence Platinum – Global Leadership |
| Eligibility | Indian citizens and NRIs, minimum entry age: 18 years, maximum exit age: 75 years. |
| Interest Rate Concession | 10 bps lower interest rate from the date of receipt of the green project certificate. |
| Processing Charges | 0.50% of loan amount, capped at Rs. 15,000 plus GST. |
Source: Union Bank Of India
Sustainable Features You Can Invest In
With a Green Home Loan, you can incorporate a variety of eco-friendly features:
- Solar Energy Systems
- Energy-Efficient Windows and Doors
- Rainwater Harvesting Systems
- Geothermal Heating and Cooling
- Smart Home Energy Management
Also Read: Sustainable Read Estate
Challenges and Considerations
While Green Home Loans present numerous benefits, there are certain challenges and factors to consider:
| Challenges | Considerations |
|---|---|
| Higher Initial Costs | Eco-friendly materials and technologies may have higher upfront costs, although they lead to long-term savings. |
| Limited Awareness | Lack of awareness among borrowers about the availability and advantages of Green Home Loans. |
| Certification Requirements | Obtaining green building certifications can be time-consuming and may require adherence to stringent standards. |
| Limited Lender Options | Not all banks offer Green Home Loans, limiting borrower choices. |
| Market Availability | Availability of certified green properties might be limited in certain regions. |
| Regulatory Changes | Evolving policies and standards may impact the eligibility and benefits of Green Home Loans. |
Maximizing Tax Benefits on Green Home Loans
1. Interest Deduction
- Section 80EEA:
- Eligibility: Available for first-time homebuyers purchasing energy-efficient homes.
- Benefit: Deduction of up to ₹1.5 lakh on the interest paid for green home loans.
- Condition: The property must meet specified energy efficiency standards.
2. Principal Repayment Deduction
- Section 80C:
- Eligibility: Applicable to both green and conventional home loans.
- Benefit: Deduction of up to ₹1.5 lakh on the principal repayment.
- Note: This can be combined with other Section 80C investments like PPF, ELSS, etc.
3. Goods and Services Tax (GST) Benefits
- Reduced GST Rates:
- Eligibility: Applicable to eco-friendly construction materials and energy-efficient appliances.
- Benefit: Lower GST rates on solar panels, insulation materials, and energy-efficient windows.
- Impact: Reduces the overall cost of building or renovating a green home.
4. Capital Subsidies
- Government Schemes:
- SRISTI and SUABHAGYA Plans:
- Benefit: Up to 30% subsidy on the installation costs of renewable energy systems like rooftop solar PV.
- Impact: Lowers the initial investment required for sustainable home features.
- SRISTI and SUABHAGYA Plans:
5. Net Metering Credits
- Energy Savings:
- Eligibility: Homeowners generating excess renewable energy (e.g., solar).
- Benefit: Sell surplus energy back to the grid and earn credits.
- Advantage: Reduces future electricity bills and provides financial returns on green investments.
6. Additional Tax Exemptions for Businesses
- Accelerated Depreciation:
- Section 32(1)(iia):
- Benefit: 40% first-year depreciation plus an additional 20% for green energy assets.
- Total Depreciation: Up to 60% in the year of installation.
- Impact: Significant reduction in taxable income for businesses investing in green infrastructure.
- Section 32(1)(iia):
- Income Tax Exemption:
- Section 80IA:
- Benefit: 100% exemption on profits from new solar power plants for ten years.
- Advantage: Encourages businesses to adopt renewable energy with long-term tax-free earnings.
- Section 80IA:
Check Out: Home Loan Tax Savings Calculator
Future of Green Home Loans in India
The trajectory of Green Home Loans in India is poised for significant growth, driven by several factors:
- Initiatives like the National Mission on Sustainable Habitat and tax incentives encourage sustainable construction.
- Increasing public consciousness about climate change and sustainable living boosts demand.
- Innovations in construction materials and energy-efficient technologies make green homes more accessible and affordable.
- More banks and financial institutions are likely to introduce and expand their Green Home Loan offerings.
- Incorporation of solar panels, rainwater harvesting, and other renewable solutions into home designs complements green financing.
Home Loan Interest Rates by Top Banks
| Bank | Up to Rs. 30 Lakh | Above Rs. 30 Lakh to Rs. 75 Lakh | Above Rs. 75 Lakh |
|---|---|---|---|
| SBI Bank | 8.00% p.a. onwards | 8.00% p.a. onwards | 8.00% p.a. onwards |
| HDFC Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| LIC Bank | 8.50% – 10.35% p.a. | 8.50% – 10.55% p.a. | 8.50% – 10.75% p.a. |
| ICICI Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Kotak Mahindra Bank | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
| Punjab National Bank | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. | 8.50% – 11.05% p.a. |
| Bank Of Baroda | 8.40% onwards | 8.40% – 10.65% p.a. | 8.40% – 10.90% p.a. |
| Bajaj Housing Finance | 8.50% p.a. onwards | 8.50% p.a. onwards | 8.50% p.a. onwards |
| Axis Bank | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. | 8.75%-10.30% p.a. |
| Bank of India | 8.40% p.a onwards | 8.40% p.a onwards | 8.40% p.a onwards |
| TATA Capital | 8.75% p.a. onwards | 8.75% p.a. onwards | 8.75% p.a. onwards |
Home Loan Processing Fees by Top Banks
| Bank | Home Loan Processing Fee |
|---|---|
| SBI (State Bank of India) | 0.35% of the loan amount (min ₹2,000, max ₹10,000) + GST |
| HDFC Bank | Upto 0.50% of the loan amount or Rs. 3300/- whichever is higher |
| ICICI Bank | 0.50% of the loan amount (min ₹3,000, max ₹5,000) + GST |
| Axis Bank | 1% of the loan amount or ₹10,000 (whichever is lower) |
| Kotak Mahindra Bank | 0.5% – 1.00% of the loan amount |
| Bajaj Housing Finance | Up to 4% of the loan amount |
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Conclusion
By opting for a Green Home Loan, borrowers can not only achieve their dream of owning a home but also contribute positively to the planet. As the financial landscape continues to evolve, the prominence of green financing is set to rise, paving the way for a greener, healthier, and more sustainable India.
Ready to Go Green? Book a FREE Consultation call with Credit Dharma. With our expert advice and tailored solutions, we make the path to homeownership smoother and more achievable.
Frequently Asked Questions
A green housing loan finances the purchase or construction of environmentally friendly homes that meet specific sustainability standards.
A green loan provides funding for projects that offer clear environmental benefits, such as renewable energy installations or energy-efficient building constructions.
Interest rates for green loans in India vary by lender; for instance, Union Bank of India’s Union Green Home Loan starts at 8.60% per annum.
Interest rates on green loans differ among financial institutions; for example, Bank of Maharashtra offers a 0.10% concession on their regular housing loan rates for green housing projects.
The Chief Minister Solar Powered Green House Scheme in Tamil Nadu provides free solar-powered homes to rural residents living below the poverty line.
HDFC Home Loan
SBI Home Loan
