Green deal wall insulation...

stingray_316

We have had a advisor out for green deal on wall insulation and papers have been received telling us how much we can save in estimate yearly...
We now have to sign the papers for the credit agreement and insulation agreements so they can get the ball rolling...
The payments are going to be through the key paid electricity meter over 25 years...
What l would like to know is has anyone on here had it done this way and is it a good way to pay for it, they say you will never be any worse off on the heating bills and obviously have nice exterior walls..

So how does it work off the meter as l cannot get my head around how it works..
If they are taking £20 a month from the meter and its paid quarterly which is £60 does this mean they increase the electricity units so you put more in or is this a separate payment on the meter and the unit prices stay as they are..
Also what happens if you don't put enough in the meter over the 3 months when they come to take the payments out...
Confused:o hope someone can give me some advice here as we need to get these papers signed a.s.a.p... Thanks

Joyful

Check this out for an explanation of how debt is paid back. http://www.britishgas.co.uk/help-and-advice/Pay-As-You-Go-Energy/Pay-as-you-go-meters/Repaying-my-balance-through-my-electricity-meter.html

Your unit prices will stay the same.

stingray_316

Joyful wrote: »

Check this out for an explanation of how debt is paid back. http://www.britishgas.co.uk/help-and-advice/Pay-As-You-Go-Energy/Pay-as-you-go-meters/Repaying-my-balance-through-my-electricity-meter.html

Your unit prices will stay the same.

Does this method of paying apply to all energy company's as we are with e-on..

So they don't adjust the unit prices you just have to make sure you cover what is needed every week , does anyone know if the weekly loan payment shows up on the the meter and goes down as money goes in.. Abit like the electric readings on the meter.

Joyful

Yes, this is how all electricity meters recover debt. The debt will show on screen S and the weekly recovery amount agreed will show on screen T. The debt will go down by the agreed amount weekly.

macman

I thought Green Deal repayments were recovered over 10 years, not 25?! Are you really likely to remain in the property for 25 years? Are you aware that if you sell, the purchaser must take on the debt repayment?
The interest is 7% p.a, so over 25 years that is a huge amount of interest-far more than the capital value of the loan. Do you really want to tie yourself to a 25 year term for a £6K loan?
If this is for solid wall insulation, it's about the least cost-effective insulation measure around-very high cost for the energy savings achieved.

stingray_316

macman wrote: »

I thought Green Deal repayments were recovered over 10 years, not 25?! Are you really likely to remain in the property for 25 years? Are you aware that if you sell, the purchaser must take on the debt repayment?
The interest is 7% p.a, so over 25 years that is a huge amount of interest-far more than the capital value of the loan. Do you really want to tie yourself to a 25 year term for a £6K loan?
If this is for solid wall insulation, it's about the least cost-effective insulation measure around-very high cost for the energy savings achieved.

No it's over 25 years, and it will make the outside walls look a lot better than they are at the moment ..plus the benefit of saving on heating costs...
I understand what you are saying about selling the house and the debt stays with the house but who every buys they are going to benefit from a much warmer house than it is ..as these concrete houses are freezing in winter even with the heating on..
As for the interest being more than the loan.. No it's not ...
When or if l sell the house I might even add abit to the asking price pay what's left on the insulation loan and everyone's happy and none the wiser...

Richie-from-the-Boro

Why would anyone buy a 25 year debt plus interest and an annual charge ?.

Add to the loan the interest rate fixed for the full term of the plan at 7.9-10.3% plus a one-off loan fee of £63 and a £20 annual finance charge for every loan that’s taken out.

When or if l sell the house I might even add a bit to the asking price pay what's left on the insulation loan and everyone's happy and none the wiser...

That's dream, the first thing the buyers solicitor or mortgage company is going to put a big red flag on is that any prospective buyer should beware.

macman

You haven't told us the amount of the loan, but I calculate that (if the repayment is £20 pm) and the APR 7.7%, then you are borrowing about £2,700 and the interest will be about £3,400: total £6,000. So I don't think you've done the maths here.
You'd do far better on a personal loan, remortgage, or even an interest free credit card: borrowing such a small amount over a quarter century (and, at such a high rate of interest) is not a good plan.
Borrowing this money over a 10 year term at the same rate would result in an interest saving of about £2,200, and only increase the repayments to about £30pm.

stingray_316

Ok here are the actual figures ...
Interest rate 6.96% per annum (fixed)
Apr 8.70% (fixed)
Can someone tell why they have put two rates, I presume the interest rate I will be paying is 6.96% fixed over 25 years..

The financial details are ..
Loan credit £2'200
Interest on the total amount financed £2,410,36
Set up & servicing charge. £ 504.19
(Made up of 0.05 charge per day).

Total charge for credit"....................£2.914.55

Total amount payable ......................£2.200
£2.914.55

---

£5.114.55



The amount of the repayments instalments will be calculated using a daily rate of 0.58p for 8,818 days beginning on the green deal charges start date

So here are the details and I'm told you can pay off more or all in the the future and do not get charged for early payments to finish the loan off.
What I'm not to sure of is if in the future I can afford to pay the loan off do I pay the whole financial package what is left of the 5.114.55 or do they take off the years left of the interest left on the loan..

macman

So, as I said, the interest and charges are more than the loan. Nearly £3,000 on top of a loan of just £2,200.
I repeat, you should seek to finance this work elsewhere over a much shorter period. The saving in your energy bills should (based on the GD calculation, which may or may not be accurate) be around £18 a month, or the same as the repayments), so that gives you £18 towards the repayments already. Find another £15 or so per month and you can reduce the loan term to less than 10 years.
Early repayment terms do apply on a loan over 15 years, so your adviser is giving you false info:

'But for Green Deals of longer than 15 years, there is a maximum charge of £6 for each year left on the loan for every £1,000 you want to repay early'.

Richie-from-the-Boro

I presume the interest rate I will be paying is 6.96% fixed over 25 years

Is wrong my friend. The difference between the AER & APR is the AER of 6.96% does not take into account each years 'other charges' you will have to pay. Your assumption is therefore wrong you will be paying an APR of 8.7% over the 25 year period. The APR was invented precisely so that innumerate individuals could at a glance compare exactly the difference between 'real costs', all lenders have to tell you what their APR is before you sign an agreement.

Can someone tell why they have put two rates

- the 6.96% is the AER without the 'other charges' you will have to pay
- the 8.7% is the APR with the 'other charges' you will have to pay