Consumer Corner: Taking a green approach to your finances
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There’s more to going green than recycling and cutting back on plastic. Going green on your finances can help you save a lot of money and there are a lot of ways you can do this. There are products ranging from green mortgages to green investments to green loans to getting an insurance discount for being green.
Trevor Grant, chairman of the Association of Irish Mortgage Advisors (AIMA) said that if buying or building an energy-efficient home, apply for a green mortgage if it’s the cheapest mortgage available to you as you could save thousands in the first few years of your mortgage by doing so. Green mortgages are currently available from AIB, Bank of Ireland, EBS, Haven, and Permanent TSB.
“Some of the cheapest mortgages out there are green mortgages, particularly if fixing your mortgage. They are typically available to those who buy or build energy-efficient homes but you may qualify for one if you already have a mortgage or if you’re topping up your mortgage.”
For example, if you already have a mortgage with AIB, your home has a Building Energy Rating (BER) of between A1 and B3 and you’ve got more than five years left on your mortgage, you can also get AIB’s green mortgage rates. Most green mortgages are also available to mortgage switchers.
“To qualify for a green mortgage, you must be buying or building a home with a BER of B3 or better or in the event that you already own your home but are taking up a green discount on an existing or top-up mortgage, your home must meet that minimum B3 energy rating too.”
There may be some drawbacks to green mortgages as you may lose out on a lender’s cashback offer if getting a green mortgage. For example, you can’t get EBS’s cashback offer if taking up the lender’s four-year green fixed rate.
“You must usually fix your mortgage to get a discounted green rate and this may not suit you if you’d prefer the variable route. Don’t assume that a ‘green’ mortgage is cheaper than home loans available elsewhere.”
Jonathan Hehir, MD of insuremycars.ie said taking care of the environment could make you eligible for insurance discounts.
“Your insurer may offer a home insurance discount if you have an energy-efficient home. You may also be able to get a reduced insurance premium if you buy an electric car. This is on top of the fuel savings that you make when driving an electric car and the reduced toll charges you’re entitled to on the M50 motorway and some other toll roads.”
Also investing in ‘green’ or sustainable and ESG investments is another way to take a green approach to your finances.
Michael Kavanagh, CEO of the Compliance Institute said however that it is important to be aware of ‘greenwashing’ as this has become an issue in recent years.
“Greenwashing is summarised as the attempt by companies to present their products as environmentally friendly when in fact there is no real quantifiable basis for this claim."
More than four in ten businesses have seen evidence of greenwashing by companies operating in Ireland, according to the findings of a survey by the Compliance Institute in 2022.
There are a number of steps which you can take yourself to boost your chances of investing in genuine green investments. For example, where a company or fund makes claims they are green, look for the evidence which backs up those claims.
“I would suggest finding out what the company has done, and plans to do, to support its claims that it is green. Decide too what it is you are trying to achieve with your investment.
“Search for information on the company’s website or in its sustainability reports, or in news coverage of the company, to see what exactly the track record of the company or fund is around this and if it has made any positive achievements in the issues you consider important.”
Jason Walsh, Investment Propositions Manager at Royal London Ireland said that no matter how passionate you are about a particular Environmental, Social and Governance (ESG) investment or initiative, it’s always wise to remember the golden rule of investing which is ‘don’t put all your eggs in one basket’.
“Having a diversified mix of investments can help reduce your investment risk and should lead to a more consistent investment return. You can generate good returns from ESG or sustainable or responsible investments.”
Also, lenders like the Credit Union have green loans on offer which could save you money.
Kevin Johnson, CEO of CUDA said green loans will usually be cheaper than other loans offered by a lender.
“Some of the cheapest ‘green’ home improvement loans are available from credit unions who have a range of solutions for homeowners who are upgrading their home’s energy efficiency."
One product for home energy upgrades is a scheme between participating credit unions in association with the Sustainable Energy Authority of Ireland (SEAI). Some banks and An Post also offer discounted green home energy improvement loans.
