Structuring a Loan Strategy Around Green Home Loans & NatHERS
For Australian mortgage brokers, Green Home Loans are an emerging product line that offers tangible financial benefits, making them a critical consideration within the framework of Best Interests Duty.
These are specialized loans for energy-efficient homes, often requiring a high NatHERS rating (6+ stars). For the client, this unlocks two distinct advantages:
This combination provides substantial, long-term savings and improves client cash flow.
Green Loans are not just a product, they are a compliance and serviceability tool. Failing to discuss them is a risk, while proactively using them is a significant opportunity.
Failing to recommend a lower-rate product with significant long-term financial advantages might be seen as a failure to act in the client's best financial interests.
This is especially true if the client is building or undertaking substantial renovations where efficiency standards are already being discussed. It's your duty to connect these features to a better financial outcome.
Lower rates combined with lower utility bills directly improve a client's cash flow and, potentially, their serviceability ratio.
The chart below shows how a Green Loan reduces the client's total monthly housing costs (loan repayments + energy bills) compared to a standard loan, freeing up cash and reducing financial stress.
Use this simple discovery process to identify Green Loan opportunities and demonstrate your value as a strategic advisor.
1. Client building or renovating?
2. Ask: "What is your target NatHERS rating?"
3. Is it 6+ Stars?
"Great. Based on that rating, we can access Green Loans. This strategy could lower your interest rate AND your future utility bills."
Understanding the documentation is key. A Green Loan requires different, but not necessarily more difficult, paperwork than other niche products.
Required Docs:
Business Activity Statements (BAS), 6–12 months of Business Bank Statements, Accountant’s Letter.
Key Criterion:
Consistent income demonstration over a shorter period (less than 2 years of tax returns).
Broker Opportunity:
Accessing a growing segment underserved by traditional lenders by maximizing servicing capacity.
Required Docs:
Energy Ratings (e.g., NatHERS 6+ Star Certification), Detailed Building Plans, Certification of Sustainable Materials/Systems.
Key Criterion:
Property must meet specific environmental and energy efficiency standards (e.g., NatHERS 6+ Star).
Broker Opportunity:
Leveraging lower interest rates and environmental benefits for superior client outcomes and improved serviceability.
Your role is shifting from loan arranger to financial planning advisor.
By demonstrating that an initial investment in sustainability yields superior financial outcomes, you solidify your value and meet your Best Interests Duty.