Solar power could cut four years off mortgage8th Dec 2011
While many Australian homeowners continue to wait for the banks to drop their interest rates, a reduction in mortgage can also be achieved through the installation of solar power according to one of Australia's peak clean energy bodies.
The Sustainable Energy Association of Australia (SEA) has suggested that installing rooftop solar panels could cut as much as four years off a 25-year $100,000 mortgage.
According to SEA, the investment made in household solar power could be repaid in between four and seven years, assisted by existing federal government rebates - after which point electricity sourced from those panels will be at no cost.
"If this is factored into repayments over the life of a mortgage, it represents a substantial saving on the total cost of the mortgage," the association said in a statement (December 7).
Using calculations based on four factors - a 25 year $100,000 mortgage, a 1.5 kilowatt solar power system at $3,000, the system purchase price added to mortgage and a $600 saving a year in generated electricity costs (at 22 cents per kilowatt hour) - the clean energy body proposes that the $103,000 total could be paid off in 21 years.
"This is a better outcome than a 0.25 per cent interest rate cut on the loan," the SEA asserted.
According to SEA chief executive Professor Ray Wills the proportional savings are smaller on larger loans, but significant saving are still delivered in the long run.
"On a $200,000 mortgage, the contributed savings from 1.5 kilowatt solar panels would shave just over two years of a 25 year loan," he said.
"Of course if electricity prices rise the value of savings increases and your ability to pay off your mortgage would not be compromised by rising energy bills."
Increasing electricity prices can often act as a prompt for many Australians to consider utilising the free power of the sun to provide their energy needs.
Professor Wills urges Australian home owners looking to install a rooftop solar panel system in the new year to make an educated decision.
"Always seek independent financial advice, purchase wisely and as with any significant investment, get a second quote on a system with comparable specifications and choose a reputable supplier," he suggested.
Information used in the SEA's calculations - such as the price of a solar power system and government rebates - differ between states and territories, so homeowners should check what price applies to them.
Posted by Mike Peacock - Solar correspondent