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Will solar panels add value to your property?

In 2014, the Australian Bureau of Statistics reported that 1 in 5 Australian households were using some form of solar power, whether that be in the form of solar heating or solar rooftop panels. With increasing concerns about climate change and the cost of electricity sky-rocketing, it makes sense that households would be turning towards more renewable sources of energy.

Solar energy is one of the most affordable kinds of renewable energies, and therefore one of the most popular. But how does it work? How much will it cost you, and how much will it save you? And, most importantly, will it add to the value of your property?

Whether you want to buy, refinance or renovate - Lendi makes home loans simpler.

What are rooftop solar panels?

Rooftop solar panels convert energy from the sun into electricity, so you are effectively able to generate your own power. They work best when facing north, and during the times of the year when the sun shines brightest. While this does mean they don’t work at night - so you’ll need to revert to using ordinary electricity - they will work wonderfully for you during the summer months, when you’ve got the air-conditioner and all the fans going during the hottest part of the day, therefore saving you loads off your electricity bill.

Once installed, rooftop solar panels require little maintenance. They have no moving parts and, if correctly installed, are typically quite reliable. Depending on the quality of the system and on the installation itself, you can expect your solar rooftop panels to last for between 20 to 30 years.

How much do they cost?

solar-panel-rooftop-array The cost of your installation will depend on the how much wattage you’re hoping to generate, and therefore the size of the system. Fortunately, installation prices have dropped significantly over the last few years. Once upon a time, it could cost you $10,000 to install a 1kw system, but now a 3kw system - a good size for the average home - can cost you between $3,400 - $5,600, while a slightly larger 5kw system can cost between $4,900 - $8,000.

While this may seem like a lot, consider how long they last, and how much you’ll likely save on electricity bills after they’re installed.

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How much will I save?

Of course, how much you’ll save on power will depend on your usage, where you live and how much you’re being charged.

On average, Australian households use around 6000kW of electricity per year, that's between 16 and 18kW a day. If you’re a family living in Bondi Junction, for example, and 60% of your 16kW usage is between the hours of 9am and 5pm, a 2.5kW solar panel system could potentially save you up to $730 on your power bill annually. Over 5 years you could save $3,650. By the 6th year you likely would have recouped the amount you spent to install the system, and by the 10th year you could’ve saved more than $10,000 on your electricity bills.

How can I finance this?

Many lenders will allow you to get cash out from your home loan to cover the cost of installing solar panels. Though you'll have a longer loan period or higher repayments, the money you’ll save on electricity bills should help. As always, we recommend you speak to a Home Loan Specialist before making any decisions.

Additionally, some state and territory governments do offer incentives to households that install renewable energy systems like solar rooftop panels. In Australia, rebates come in the form of small-scale technology certificates, which may be redeemed to help refinance the cost of installing the renewable energy system. How much these STCs may be redeemed for depends on supply and demand, which fluctuates on a daily basis, but you can generally expect to get about $30 - $40 per certificate.

Certain states also offer feed-in tariffs to people whose systems produce a surplus of power that is returned to the grid, though these are becoming less common.

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Do solar panels add value to property?

solar-panel-technician The short answer is yes.

A recent survey conducted by Origin Energy revealed that 85% of Australians thought solar panels added value to property. With electricity prices only increasing, people are naturally looking for ways to save money on the bills. Having a solar panel system installed is one such way to save.

The size of the installation will influence how much value is added. Generally, the more panels installed, the greater the increase on the property’s value. Some estimates put the increased value from a 5kw installation at approximately $29,000.

More and more people are turning towards renewable sources of energy, and solar power stands out among the rest. Not only is it a clean source of energy, it’s also quite affordable, and will ultimately save you (or your tenants) money in the long run. If you’re looking for something to give you an edge on the property market, whether you’re an investor or you’re looking to increase the value of your own property, or you’re simply hoping to save on your electricity bills, solar panels may prove to be a good investment.

Wondering how much your property is worth? Find out with Lendi's free property report.

Tags: property, renovate, solar panels, saving

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Important legal stuff

COMPARISON RATE WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years.
Lendi is the trading name of Lendi Pty Ltd, a related body corporate of your licensed credit assistance provider, Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence Number 442372). We will never sell your email address to any third party or send you nasty spam, promise.
EXAMPLE: This example is current as at 20th October 2016. A Click Loans Online Principal and Interest Loan of $150,000 over 25 years has monthly repayments of $767. This is calculated based on the interest rate of 3.69%, comparison rate of 3.69%, upfront fees of $0 and annual fees of $0.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
Lendi is a privately owned and operated Aussie business. Our mission is to provide Aussies with the right experience when choosing a home loan from our panel of major and non-bank lenders including Click Loans which is a wholly owned subsidiary of Auscred Pty Ltd and a related body corporate of Auscred Services, your credit assistance provider. Although Lendi compares over 1600 products from over 30 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 40% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors. We have an independent and founder led board.
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