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Benefits of warmer homes will cost the borrower

Mar 11th, 2010 | By | Category: Front Page Layout, Latest News, News, Uncategorized

Ratepayers who borrow money from the Greater Wellington Regional Council for home insulation may be better off looking for other deals.

The council is lending people up to $2,600 to help fund insulation costs over and above the government’s Energy Efficiency and Conservation Authority grant.

 The loans have an annual administration fee and incur interest at 7%.

If the maximum $2,600 is borrowed, the borrower will have to pay back $4,181.94 over nine years.

Regional council communications manager Brett Sangster says the system is designed to break even.

Secretary for the Wellington Progressive and Residents’ Associations, Tom Law, says it “sounds like a money spinner”.

“Not only do you have to pay back the capital and admin costs but a substantial amount of interest.”

Mr Law says people should keep looking around for alternative providers.

Kiwibank communications manager Bruce Thompson says people with a floating mortgage may be able to add the costs of the insulation scheme to their mortgage and pay interest at 5.6%.

If a personal loan was taken out from a bank and the payments were fast-tracked, the homeowner would also pay back less money, Mr Thompson says.

But he says the loan is still a good deal for people in other circumstances because it will add quality to their lives.

“One, it will make their houses warmer and two, it will reduce their power bills.”  

To receive the loan, recipients must be ratepayers who are up to date on their rate payments, own a house built prior to 2000 and are receiving an Energy Efficiency and Conservation Authority grant. 

The grant covers up to $1300 (33% of the total cost) for insulation and $500 for heating. 

Homeowners and landlords who hold community services cards are eligible for 60% of the total cost of insulation and $500 for heating.

Regional council chair Fran Wilde says the council will cap its total loans at $3 million per year and will assist 1,150 households.

She says it will also reduce air pollution from open fires and lower greenhouse gas emissions.

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