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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

CriteriaRequirement
Work ProfileSalaried employees
Self-employed professionals
Self-employed non professionals
Farmers / Agriculturists
PurposeIdeal 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.
NationalityIndian Residents
NRIs
POIs
Credit Score700+

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 CategoryRequirement
Leadership in Energy and Environmental Design (LEED) from LEED IndiaProjects 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 IndiaHousing projects can be rated on the following levels based on the GRIHA rating:
1 Star
2 Star
3 Star
4 Star
5 Star
In addition to these certifications, housing projects rated by other agencies may also be considered, provided they are approved by the municipal corporation of the district or another authorized body responsible for certifying green projects

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.

CategoryDetails
No Processing FeesZero processing fees under the scheme.
Interest Rate Concession0.10% concession on applicable interest rates (subject to the minimum floor rate).
Quick SanctionFaster 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.

CategoryDetails
Loan AmountRanges from Rs. 2 lakhs to Rs. 6 lakhs.
System InstallationCapacity ranges from 3 KW – 10 KW.
Margin RequirementMinimum 20% of the cost of the property.
Maximum TenureUp to 120 months (10 years), excluding the moratorium period.
Processing FeesZero processing fees.
Rate of InterestHome 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.

CategoryDetails
Certification RequirementHousing projects must be certified/rated by the Indian Green Building Council (IGBC) or other approved rating agencies.
IGBC Certification LevelsCertified – Best practices
Silver – Outstanding performance
Gold – National Excellence
Platinum – Global Leadership
EligibilityIndian citizens and NRIs, minimum entry age: 18 years, maximum exit age: 75 years.
Interest Rate Concession10 bps lower interest rate from the date of receipt of the green project certificate.
Processing Charges0.50% 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:

ChallengesConsiderations
Higher Initial CostsEco-friendly materials and technologies may have higher upfront costs, although they lead to long-term savings.
Limited AwarenessLack of awareness among borrowers about the availability and advantages of Green Home Loans.
Certification RequirementsObtaining green building certifications can be time-consuming and may require adherence to stringent standards.
Limited Lender OptionsNot all banks offer Green Home Loans, limiting borrower choices.
Market AvailabilityAvailability of certified green properties might be limited in certain regions.
Regulatory ChangesEvolving 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.

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.
  • 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.

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

BankUp to Rs. 30 LakhAbove Rs. 30 Lakh to Rs. 75 LakhAbove Rs. 75 Lakh
SBI Bank8.00% p.a. onwards8.00% p.a. onwards8.00% p.a. onwards
HDFC Bank8.75% p.a. onwards8.75% p.a. onwards8.75% p.a. onwards
LIC Bank8.50% – 10.35% p.a.8.50% – 10.55% p.a.8.50% – 10.75% p.a.
ICICI Bank8.75% p.a. onwards8.75% p.a. onwards8.75% p.a. onwards
Kotak Mahindra Bank8.75% p.a. onwards8.75% p.a. onwards8.75% p.a. onwards
Punjab National Bank8.50% – 11.05% p.a.8.50% – 11.05% p.a.8.50% – 11.05% p.a.
Bank Of Baroda8.40% onwards8.40% – 10.65% p.a.8.40% – 10.90% p.a.
Bajaj Housing Finance8.50% p.a. onwards8.50% p.a. onwards8.50% p.a. onwards
Axis Bank8.75%-10.30% p.a.8.75%-10.30% p.a.8.75%-10.30% p.a.
Bank of India8.40% p.a onwards8.40% p.a onwards8.40% p.a onwards
TATA Capital8.75% p.a. onwards8.75% p.a. onwards8.75% p.a. onwards
The interest rates, maximum tenures, and other charges are subject to change, and it’s advisable to check with our experts for the most current information.

Home Loan Processing Fees by Top Banks

BankHome Loan Processing Fee
SBI (State Bank of India)0.35% of the loan amount (min ₹2,000, max ₹10,000) + GST
HDFC BankUpto 0.50% of the loan amount or Rs. 3300/- whichever is higher
ICICI Bank0.50% of the loan amount (min ₹3,000, max ₹5,000) + GST
Axis Bank1% of the loan amount or ₹10,000 (whichever is lower)
Kotak Mahindra BankUpto 2% of loan amount (plus taxes and any other applicable statutory dues)
Bajaj Housing FinanceUp to 4% of the loan amount
The interest rates, maximum tenures, and other charges are subject to change, and it’s advisable to check with our experts for the most current information.

Get the Best Green Home Loan Offers with Credit Dharma

Credit Dharma is your trusted partner for securing the best Green Home Loan offers, with over ₹500 Cr+ loans handled and partnerships with 20+ leading banks. We provide exclusive access to the lowest interest rates and a seamless, digital process with fast approvals in just 1-2 weeks, backed by lifetime support from our home loan experts.

Why choose Credit Dharma? We provide:

  • Lowest Interest Rates: Save more with every EMI.
  • Maximum Funding: Get up to 100% funding for your dream home.
  • Simple & Digital Process: No tedious paperwork or branch visits.
  • Expert Guidance: Lifetime support from our team of specialists.

Compare, choose, and secure the best Green Home Loan offer with Credit Dharma — your home loan journey starts here!

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

What is a green housing loan?

A green housing loan finances the purchase or construction of environmentally friendly homes that meet specific sustainability standards.

What is the concept of a green loan?

A green loan provides funding for projects that offer clear environmental benefits, such as renewable energy installations or energy-efficient building constructions.

What is the interest rate of green loan in India?

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.

What is the interest rate on a green loan?

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.

What is green house scheme?

The Chief Minister Solar Powered Green House Scheme in Tamil Nadu provides free solar-powered homes to rural residents living below the poverty line.

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