This BuiltGreen home in Langley, by Morningside Homes, would qualify for incentives from TD Bank and CMHC.

By Dermot Mack

A major bank is willing to cut lending rates to encourage green home improvements, and Vancity is expected to offer a competing program this spring.

Late last year, TD Bank, in a national survey it commissioned through Ipsos Reid, found that nearly three-quarters of Canadian homeowners or those considering buying a home would be willing to pay a premium for environmentally friendly features.

When asked how much more they would be willing to pay, the average response was 10 per cent. TD Bank can do the math. At the average house price in Greater Vancouver, this means that there was about $70,000 on the table if a home could be seen as green.

When asked why they would consider choosing environmentally friendly features in their homes, two-thirds of respondents said that future energy cost savings are very important. Nearly 60 per cent cited improved resale values as very important.

The problem is that most new houses on the market aren’t that green, and most people in any case are buying and fixing up resale homes.

Ipsos Reid found 29 per cent of respondents said they have already made significant improvements to their home to make it more environmentally friendly, and another one-third say they are likely to do so in the next 12 months.

Three quarters said they would consider conducting an environmental assessment prior to finalizing renovation plans. In British Columbia alone, where home renovation is a $6 billion business, it is clear that green is now big business.

TD Bank

To TD’s credit, they took the survey results and came back with an incentive to help homeowners planning green-inspired makeovers.

In December, the bank launched what it calls its green products package.

The green deal offers a five-year fixed-rate mortgage or a home equity line of credit, which is popular in renovation financing, at one per cent below the posted rate.

In addition, TD will provide a cash rebate of up to one per cent of the amount of the mortgage or fixed portion of the line of credit when the customer submits receipts for Energy-Star qualified products within six months of the start of the financing.

As well, TD will make a donation of $100 to its Friends of the Environment Foundation.

A typical scenario for the loans might involve the purchase of a home for $250,000 for which the buyer secures a five-year fixed-rate mortgage of $200,000 with a rate discount of one per cent. The homeowner then invests $10,000 to complete some qualified upgrades to the heating system, windows and doors, as well as new kitchen appliances. After submitting the receipts for these upgrades, TD will provide the homeowner with a rebate of up to one per cent of the $200,000 mortgage. In this case, that adds up to $2,000 in rebates. TD then would make a donation of $100 to the Foundation, which was set up in 1990 and supports environmental projects across Canada.

Vancity

Vancity, through its online bank, Citizens Bank of Canada, plans to roll out a green mortgage in British Columbia this May. It has been available in Ontario since last year.

“It’s a pilot project right now,” said Jean-Marc Handfield, vice-president of retail, Citizens Banks of Canada. “There has been a lot of interest in the Greater Toronto area.”

Here is how the plan works. Home-owners who sign up for the bank’s green mortgage receive a $10,000 line of credit at prime for energy-efficient upgrades, plus, in Ontario, a recycling bin filled with $875 worth of information and coupons, including a $375 home energy audit that will help homeowners decide what energy-efficient improvements can be made to their home.

In B.C. Vancity has been offering its climate change mortgage. This mortgage doesn’t offer any rebates or rate cuts, but Vancity donates $1,500 to a fund to fight climate change on each climate change mortgage.

When the new program starts in B.C., Citizens Bank will donate a sum to an environmental program for each green mortgage funded.

Also, Canadian Mortgage and Housing Corporation offers buyers and renovators of energy-efficient homes a 10 per cent refund on their mortgage loan insurance premium, and extended amortization periods of up to 40 years, without any surcharges.

CMHC requires that the homes have an approved energy efficiency rating from Natural Resources Canada, or be built under an eligible energy-efficient building program, such as B.C.’s BuiltGreen program. 

Reprinted from: Home Makeover February 2008