Making your home more sustainable with consumer credit
If you want to make your home more sustainable but do not have enough savings to cover the costs, taking out consumer credit could be an option. Like any financial decision, this comes with both advantages and disadvantages.
What is consumer credit?
Consumer credit is a broad term for various types of loans used for personal purposes. These can include:
- A personal loan
- Credit card
- Overdraft on your bank account
- Instalment purchase
When it comes to sustainability, it usually involves a one-time personal loan through consumer credit, used to purchase eco-friendly materials — such as solar panels or a heat pump — or to carry out energy-saving measures like insulation.
Why choose consumer credit?
Although interest rates on consumer credit are often higher than those on a mortgage, the costs of arranging consumer credit are typically much lower. The shorter repayment term may also better align with the lifespan of sustainable investments, like solar panels. A mortgage, on the other hand, usually has a term of thirty years.
Disadvantages of consumer credit
There are also downsides to consider. The main disadvantage is the higher interest rate you pay on the loan. However, many banks offer slightly lower rates for sustainability loans. It is also worth noting that consumer credit is always registered with the Credit Registration Office (BKR).
Is consumer credit tax deductible?
If you take out consumer credit to improve your home, the interest on the loan can be deducted from your income tax.
Would you like to learn more about taking out consumer credit? Our financial advisors are happy to explore the options with you and find the form of financing that best suits your situation.
Read more about making your home sustainable with support from your local council or through your mortgage.