Financing A Solar Power System Purchase

Solar power systems will save any home in New Zealand considerable amounts of money over time. Financing can help with the cost of installation and the system itself. There are several ways you can finance a solar power system; topping up a home mortgage, a personal loan and Kiwibank’s Sustainable Energy Loan.

Mortgage Top Up

Typically, interest rates on your home's mortgage will be the cheapest financing option and make the most sense.  For example, if you are estimated to receive a 12% return on investment from a solar power system, and your mortgage is only 5% p.a., (so long as you can redraw from a home mortgage), you would still receive a 7% ROI from installing solar panels.

Personal Loan or Interest-Free Financing

Those offering this type of finance include Q Card, Gem Visa, Q Mastercard and Finance Now.

Companies like Q Card often have deals where you don’t have to pay interest on your first year, but from the second year onwards interest creeps up to around 26% p.a..

Buyers should exercise caution; interest-free doesn’t always translate to “free”.  Often in the first year of these ‘interest-free’ loans the fees can amount to an equivalent of paying 10% p.a..

Personal loans will work for many people as long as the loan is paid off within the interest-free time period. However, if left longer the benefit of cheaper electricity bills from installing solar power will be outweighed by the cost of interest incurred on the loan.

Kiwibank’s Sustainable Energy Loan

Kiwibank have a ‘Sustainable Energy Loan’ program whereby you can add a loan for a solar power system on your mortgage. If borrowing more than $5,000, Kiwibank will contribute $2,000 over 4 years towards the cost of the system.  The contributions will be divided out with $800 at the end of the first year, and $400 at the end of each of the three years. The caveats for this loan is that SEANZ members must install the system, and the system will require a 10 year manufacturer’s warranty.