Hassle-free loans for energy-efficient upgrades?

By: Tyler Guthrie - Dec 13, 2013
Source: Oregon Environmental Council

Home improvements can be great investments—to both increase the value of your home and reduce your year-round energy costs. But substantial home improvements are often prohibitively expensive. 

Or at least they were.

Since 2009, Oregonians have been able to take advantage of a new type of financing—called on-bill financing—that makes home improvements much easier to handle and much more cost-effective.

 With on-bill financing, a homeowner works with an approved contractor to make any number of energy-efficient upgrades, which are paid for by a lending organization like Craft3, a Northwest nonprofit. That loan is then paid back through the homeowner’s utility bill, which is often significantly lower thanks to the energy-efficient improvements.

This type of financing model is a win-win for all those involved—homeowners can make home improvements with little or no out-of-pocket costs, contractors can work on projects that wouldn’t have been feasible otherwise, and local lenders can invest in the community with less risk. 

The program—administered by Clean Energy Works Oregon with project management help from Energy Trust—maintains a list of approved contractors from which homeowners can work with. The contractor then works with the homeowners to select upgrades that will increase energy and cost savings. The loans can cover a variety of energy efficiency measures such as heating, air sealing, insulation, windows, some appliances, and prep measures.

So what does a typical upgrade look like? If homeowners decide on improvement work worth $16,800—such as sealing a home’s basement and attic; adding floor and wall insulation; and making water heater, heat pump, and seismic upgrades—they could potentially qualify for $2,000 in rebates and bonuses, making the total loan $14,800. Over 20 years at 5.99% APR, the monthly loan cost would be $105.98, which is factored into the utility bill. But because of the upgrades, the utility bill will have likely dropped more than 30%, which could more than cover the entire cost of the upgrade.

As mentioned above, homeowners can work with any approved contractors, which are selected by Clean Energy Works Oregon to ensure compliance with equal opportunity laws and principles, promote local hiring, provide opportunities for small businesses, provide equal opportunities for disadvantaged business enterprises, encourage sound labor practices, and engage with community-based organizations. 

So far, Craft3 has already financed 2,348 single-family homes through the on-bill financing program, and national credit unions have become interested in the program and in purchasing the loans because of their quality.

If you’re interested in making energy-efficient home improvements and taking advantage of on-bill financing to simplify the process, check out Clean Energy Works Oregon and Craft3 for more information or to get started.