The buzz around sustainability is no longer limited to energy, food, or transport. It has reached our homes too. According to a leading market intelligence company, the green building market in India is experiencing rapid expansion and is expected to grow by approximately 124% between 2024 and 2032.
As more Indians begin to consider the environment and their impact on it, an increasing number of people are seeking eco-friendly homes. To support the idea of sustainable living, banks and other financial institutions have introduced a new product for homebuyers. It is the green home loan.
This loan makes it easier for people to buy homes that are energy-efficient and built with sustainability at their core. Additionally, it allows borrowers to enjoy benefits such as lower interest rates and other perks. In short, it is indeed a good initiative to reduce carbon footprints and conserve natural resources.
Without further ado, let’s help you understand the idea of the green home loan in detail.
Green Home Loan - The Definition
A green home loan is a type of housing loan. It is specifically introduced for homes that adhere to eco-friendly building norms or green certifications, including LEED (Leadership in Energy and Environmental Design), GRIHA (Green Rating for Integrated Habitat Assessment), or IGBC (Indian Green Building Council).
It is a form of green home financing that supports the construction or purchase of sustainable homes. The focus is on properties that use less water and energy, minimize waste, and promote better indoor environmental quality. In India, several green home loan banks, such as SBI, HDFC, ICICI Bank, and Axis Bank, have launched green home loan schemes to support sustainable housing.
Green Home Loan - How Does it Work?
Obtaining a green home loan is similar to applying for a conventional home loan. The only difference is that, for a green home loan, your property must be eligible. So, what are the eligibility criteria? Here you go -
The property you intend to buy or construct must meet the standard sustainability criteria or have certification from recognized green rating agencies. This ensures the property genuinely follows eco-friendly practices.
If your property meets the eligibility criteria, you can proceed with applying for the loan through your chosen banking or finance partner. The bank or any other housing finance partner will review your eligibility, verify the documents you have submitted, and then fix the home loan interest rate, depending on their policies.
So, long story short. With a green home loan, you get financial support from your bank to buy or build a certified green home, enjoy better loan terms, and contribute to the betterment of the environment.
Green Home Loan - Detailed Eligibility Criteria
Green home loans are meant to promote eco-friendly living. While the eligibility criteria are similar to those for regular home loans, details may vary from one bank to another. Check out the table below:
Qualifying Factors |
Details |
Property Type |
The home must possess certification from green rating agencies. |
Intent |
You can apply for the loan whether you intend to buy, build, or make over a green home. |
Income and Credit Score |
Banks will assess your repayment capacity and credit profile to determine if you are eligible for the same. |
Applicant Profile |
Both salaried and self-employed individuals can apply. |
Developer Credentials |
Sometimes, the developer must be linked to recognized green projects or have pre-approved tie-ups with banks. |
Benefits of Green Home Loan
Let's take a look at the following pointers to learn about the benefits of green home loans:
- Lower Interest Rates: Many banks and financial companies are likely to offer slightly lower interest rates on green home loans than regular loans. Always remember! Even a small reduction can save you a significant amount over the tenure of the loan.
- Lower Utility Bills: Green homes are designed to use less electricity and water. It also means lower monthly bills.
- Higher Property Value: Energy-efficient homes are likely to have a better resale value, as they are more future-ready and provide healthier living conditions.
- Environmental Footprint: Buying or making a green home helps reduce your carbon footprint, protects natural resources, and supports a cleaner and greener environment.
- Additional Perks: Some banks may offer additional benefits for green homes, such as fast loan processing, minimal documentation charges, and, in some cases, higher loan amounts if the property is certified green.
Green Home Loan vs Regular Home Loan
Refer to the table below to understand the differences between a green and a regular home loan:
Feature |
Green Home Loan |
Regular Home Loan |
Property Type |
Certified eco-friendly homes |
Any Property |
Interest Rate |
Slightly lower |
Standard Rate |
Processing Fee |
Often Discounted |
Standard Charges |
Environmental Impact |
Promotes Sustainability |
No Specific impact |
Eligibility Check |
Requires Green Certification |
No Certification Needed |
Where to Apply for a Green Home Loan?
Are you wondering “where to apply for a green home loan”? Well! With the rising inclination of people towards sustainable living, most leading banks and housing finance providers in India now deal in green home loans.
So, you can visit their branch in person or apply online via their official websites. Or else, you may also visit trusted platforms like Policybazaar.com, which lets you explore different providers, compare rates, and apply online with minimal hassle.
Greener Homes, Healthier Finances, and Better Future
The vision of a green home loan marks a positive change in how our country approaches housing and sustainability.
These loans make buying or building an eco-friendly home not only easy but rewarding. These offer financial perks and support a responsible lifestyle for a better future.
Are you planning to buy a green property and be a part of the green bandwagon? Good decision, indeed! Visit reputable platforms like Policybazaar right away and head on to your journey to an eco-friendly living.
Frequently Asked Questions (FAQs)
Can I use a green home loan to renovate my current home?
Yes, you can go for a green home loan even if you intend to renovate your current home. The main idea is to add green features, like solar panels and rainwater harvesting systems, among others, to make your home more eco-friendly.
Is a certified developer required for a green home loan?
Most of the banks prefer developers who deal with recognized green projects. So, always make sure to check with your finance service provider if they fulfil the specific requirements.
Can I get a high loan amount?
Yes, you can get a high loan amount. However, it depends on your credit profile, repayment capacity, and the certifications the property has.
Can I get a green home loan at lower interest rates than the regular ones?
Yes, many banks offer a slightly lower interest rate for green home loans to encourage sustainable living.
Can I switch my existing home loan into a green home loan?
Yes, some banks allow this if your property gets certified as a green building after loan approval.