Courtesy of Business Maverick Money Cents with Neesa Moodley
| If you do choose to fund your solar installation via your home loan, stretching the repayments over more than five years will negate the lower interest rate benefit |
| How to fund your solar solution |
| The recent announcement of a solar power tax incentive, coupled with the fact that rolling blackouts are unlikely to end any time soon, is set to propel solar power sales. However, these solutions are by no means cheap. The banks all agree that there are four ways to fund your solar installation: ☀️ A personal loan. This is probably the least attractive option, given that personal loans carry high interest rates. Under the National Credit Act, the maximum interest rate on personal loans (unsecured credit) is 35.95% a year. The remaining three options involve the use of your home loan facility. The maximum interest rate on home loans is currently 20.95%. These interest rate caps change every time the repo rate changes, and we are currently in a rising interest rate cycle. ☀️ An access bond. This applies if you have extra funds that you have paid into your home loan, over and above the required monthly instalment. Not all home loans include this facility, so you need to check with your bank first. ☀️ A re-advance loan. This is where you have an existing home loan with the bank and you want to apply for the funds you have already paid into the home loan – the difference between your original loan amount and the outstanding balance. For example, your initial loan was R2.5-million and the outstanding balance is now R1.9-million, so you want to access the R600,000 you paid in.You may also have registered a higher amount than the actual loan when you made the initial loan application, and you could apply for the difference in the form of a re-advance. For example, you registered a loan of R3-million but only took out a home loan for R2.5-million and you now want to access the remaining R500,000. ☀️ A further loan. This means increasing your current home loan, provided there is sufficient equity in your property. You will have to pay a registration cost for this and depending on your credit profile, the bank may change the interest rate you pay. How much you can expect to pay 💸Standard Bank, Head of Home Services, Toni Anderson says since launching the initial offering as early as 2022 with private banking clients, the average cost of installations has been around R176,000. In July last year, Standard Bank launched a website LookSee, where you can input your address to determine how viable a solar solution will be, based on your location, roof size and weather in your area. Unfortunately for me, the Saldanha Bay municipality area is not yet covered. Using a friend’s address in Newlands, Cape Town, had better results.The property, which rests in the shadow of Table Mountain, scored a low 30 out of 100, because the amount of electricity that could be generated from sunlight was low. Reasons the site provided included a lack of sufficient sunlight and the roof being at a poor angle to the sun. LookSee estimates that solar panels could be installed on 108m² of the roof and the maximum installation would yield 71kwh of energy per day. 💸Absa offers a load shedding solutions finance calculator. I input a monthly electricity bill of R1,400, and said I want to go off the grid completely, funding the solution by transferring my home loan to Absa. The calculator kicked out a total system and installation cost of R105,921,05, with a monthly repayment of R2,951.10 over a four-year repayment period at 12.75% interest (prime plus 2%). 💸Nedbank offers three cost solutions for three scenarios, assuming your monthly electricity cost is R1,400 for 960kWh of power: – A grid-tied solution using six panels and an inverter: R55,000 to R60,000. – A hybrid solution with eight solar panels and two batteries: R115,000 to R120,000. – A totally off-grid solution with 14 solar panels and nine batteries: Almost R250,000. 💸FNB was a bit late to the party, and only went live with a solar energy home loan offering in December 2022. However, they are currently running a special with LTM Energy, where FNB clients can get 10% off a green solutions solar package. You can work out your needs using this energy calculator. I did not like that I had to enter all my contact details before it kicked out a calculation, as it seemed like a sneaky way to get my details for marketing purposes. Using a monthly electricity cost of R1,400, the system kicked out two solar PV solutions at a cost of R107,800 or R146,300. May the sun ever shine in your favour. |
