Nationwide customers across the country can now get interest-free loans of up to £20,000 for making their homes more energy-efficient.

The largest building society in Britain offers the loan as an incentive for its mortgage customers to improve their homes' eco credentials.

The loan must be used for energy-efficient home improvement, such as solar panel upgrades, air source heat pumps, window upgrades or boiler upgrades, cavity wall insulation and loft insulation, or an electric vehicle charging point.

The homeowner can choose any local or national contractor for the job. It cannot be used to make structural changes in the home.

Mortgage holders across the country will be able borrow between £5,000 to £20,000.

The loan is secured by the home and, when combined with a mortgage, it cannot exceed 90 percent of the home's worth.

Customers who have paid at least one mortgage can now apply to the green loan option.

The loan has a fixed term of two or five years, similar to a mortgage.

When the fixed-term agreement ends, the 0% interest rate will cease. The outstanding amount will be automatically transferred to Nationwide's Standard Variable Rate (SVR), which is 7.74 percent.

Nationwide mortgage advisers and brokers can offer the 0% green additional borrowing loan.

Should you borrow money to green your home?

In June 2023, Nationwide became the first major lender in the country to offer green loans at zero percent. The maximum loan amount was £15,000.

The number of applications has been low. Only 1,900 had been submitted by September 2024.

The company hopes that the higher loan limit will encourage more customers to take a look at it.

Nationwide also removes the requirement that new customers wait six months to be eligible for a loan.

What to look out for

You can easily think of an interest-free credit as free money. Like any loan, you will have to pay it back.

If the homeowner is unable to pay off the balance within the first 2 or 5 years, they will begin paying interest. They can refinance their loan to another lender.

Energy bills will benefit from green home improvements.

According to the Energy Saving Trust, installing 270mm insulation in an uninsulated attic can save the average homeowner about £230 per year on their energy bills.

Installing cavity wall insulation is expected to save around £240 per year on energy costs in a semi-detached house.

Harris continues: "While initially it's interest-free, thousands of pounds of debt are taken in order to save hundreds of dollars a year.

It is possible that, due to the high cost, borrowers prioritize their spending on food and mortgages.