The Green Deal Mythbuster Help towards energy efficiency

It's called the Green Deal; but in reality, it's a way of paying for the cost of double glazing, solid wall insulation, boiler upgrades and much more from the projected savings you'll make on energy bills.

It's complex, but for many living in England, Wales and Scotland it could pay off very well. These 20 Green Deal mythbusters explain how it works, what it's best for, who should use it and more. If it's right for you, go quick - up to £1,000 cashback's available for early adopters.

This is the first incarnation of this guide. While every effort has been made to ensure its accuracy, please suggest any changes or questions in the Green Deal discussion.

1. The Green Deal gives special 'loans' or grants to improve your home to cut energy bills. You needn't be on a low income - anyone can apply

   
   
   The big idea is that the Green Deal helps you make energy-saving home improvements to your property, and you pay for it using the savings from your energy bills. You also get a snugger home.

   You can borrow money to upgrade boilers, install loft or cavity wall insulation and much more. Unlike many energy efficiency grants, it's not just for those on lower incomes (though more help is available if you are).

   Quick questions:

   Can I do the Green Deal if I rent, not own, my place?

   If you're renting and want to improve your pad, you need the landlord's permission, as Green Deal repayments will affect future tenants. Landlords need tenants' permission to sign up too, as it's the tenants who pay the bills, whether within their rent or directly.
   
   Almost eight million people in the UK rent their home, so the Government is also encouraging landlords to sign up to the Green Deal.

   Currently, you can't force your landlord to improve their property. But from April 2016, landlords won't be able to refuse reasonable improvement requests from tenants.
   
   And by April 2018, landlords with poor Energy Performance Certificates ratings (F or G) will be forced to make their properties more efficient, by either bringing them up to an E rating, or by carrying out the maximum package of measures that can be funded under the Green Deal - so it could be worth encouraging them now.
   
   Landlords can get more info from the National Landlords Association's Green Deal service.

   Can I do the Green Deal if I'm on a prepayment energy meter?

   When you borrow via Green Deal, you make repayments through electricity bills. But you can still get Green Deal improvements if you're on a prepay meter. A small amount will be taken from the electricity meter each day, in addition to the energy you use.
   
   For example, suppose you add £30 to your electric meter. If you use £1.50 of electricity a day, if you're also paying back the Green Deal, you'll see more than £1.50 go off the meter that day. The amount will depend on your loan repayments.
   
   As Green Deal repayments are only taken from electricity bills, if your efficiency saving is on your gas bill (eg, a new boiler saves on gas used), you may have to top up your electricity key or card more often to compensate.

   If you're on a prepay meter, it's also worth checking if you qualify for grants to warm up your home. Energy companies are obliged to help people on low incomes and in low-income areas under a different scheme called Eco – read more about the Eco scheme.
   
   Also if you're on a prepay meter, don't assume you can't get a cheaper tariff by switching provider or by just getting a better deal. See Cut Prepayment Energy Costs.

   What if I'm in Scotland or Northern Ireland - does it apply?

   The Green Deal scheme runs in England and Wales. There's also a separate Green Deal Scotland scheme, which works very similarly to the England and Wales scheme. For more information, call Energy Saving Scotland on 0800 512 012.

   There's no Green Deal in Northern Ireland. The Northern Ireland Assembly is considering how best to spend its share of Green Deal cash but has not made any decisions.

   In the meantime, there's a wealth of information on energy saving measures, including what grants are available to NI residents on low incomes, through NI Direct Energywise.

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   A note from Martin

   "The Green Deal is one of the Coalition Government's big ideas. The fact it has a political dimension, by its very nature, means some will say it's the best thing since sliced bread, others that it sups with the devil.

   "We've tried to ignore that in this guide. The team and I have focused on the practical, financial standpoint: 'Is it right for you?' For many, but not all, it is a very powerful deal that should be seriously considered.

   "Just as in the Student Finance Mythbuster guide, the big fear factor comes from the fact much of the help's couched as an interest-charging loan, enough to frighten the bejeebees out of many people.

   "Yet if you're debt-averse, don't just ignore it. This could be a great way to make your home a warmer, more energy efficient place to live without any increased outlay.

   "In truth, though, frankly I think the deal could've been structured slightly differently, with the same outcome. If no interest was charged, a mythbusting piece like this wouldn't be so necessary.

   "Yet, of course, there is another element. If it does catch on (the jury's still out on that), it could help improve the UK's incredibly inefficient housing stock. In the long run, that's our only chance of cheaper energy bills."

2. It's a debt, Jim, but not as we know it. For many, it won't ever increase their monthly costs

   It's been billed as a loan, which will, wrongly, put many people off. Yet it's not a debt in the traditional sense:

   • You pay back only what you're predicted to save on bills each month, so there's no NET cost. If your energy bills are £1,000 a year now, all being well (more on this later), your energy bills PLUS Green Deal repayments (including interest) will never be more than that – sometimes less. So there's no net increase in cost to you, and your home's more efficient.

   • It lightly credit scores. The credit eligibility criteria are less tough than normal lenders'. So 80% of people should get accepted – far more than for a normal loan.

   • Repayments are spread over a long term. The homeowner (ie, you, unless you move, when it moves to the new owner) pays the money back over 10 to 25 years.

   • The energy company makes repayments for you. You don't actually repay the loan directly, your energy firm does it for you out of your electricity bills. So, just to hammer it home, that means you should pay at most the same as you do now, until the loan's paid off – then you'll feel the big benefit.

   What happens if I get into financial difficulties on my energy bills?

   If you are struggling to pay your energy bills, your first port of call should be the Home Heat Helpline (0800 33 66 99). It's a confidential service that tells you if and what help you're entitled to.
   
   If you're not eligible for help, call your energy supplier. They must work through solutions with people struggling to pay bills – and this is no different if you've Green Deal payments.
   
   Your supplier may suggest a payment plan, or it may put you onto a prepay meter, so you always know how much gas and electricity you have left.

   Cutting your supply is, and always will be, a last resort. Energy firms have agreed not to cut off vulnerable households' supplies in winter months, no matter what their struggles are.

   Some energy suppliers reserve the right to agree a contract to share default data with credit reference agencies if you can't pay your bills. Check our guide to see if your energy company shares data.

   If you've a wider debt problem, and struggle to pay other debts, see our Debt Help Guide.

3. You should never have to repay more than you 'save' in reduced energy bills

   This is the most important thing to understand. So let's labour it a little bit. You only have to repay what you're predicted to save on your energy bills each month.

   Imagine Mr Ivor Coldhome gets loft and cavity wall insulation costing £900. For his three-bed semi, it's estimated this'll knock £159 off his energy bills each year.

   Ivor takes a loan for £900 at 10.9% APR. His finance plan means he repays £103 a year for 25 years, after which his loan and interest is fully repaid.

   So with £350 cashback for installing home improvements through Green Deal, as his savings are more than his repayments, he's £406 better off in the first year, and £56/year after that.

   You repay through your electricity bill. So the idea is that your bills (you may save on gas or oil bills, not necessarily electricity) decrease enough to cover the repayments, so total energy bills stay about the same until the loan's paid off.
   
   So why is it 'save', not save? Because it's based on nominal, not real, savings
   
   In a perfect world, the saving would be based on the actual reduction in your energy bill thanks to the improvements. Yet that's impossible to work out, as so many different factors come into play to affect this.
   
   So the savings figure is based on average savings predictions, incorporating the following factors - though all use typical behaviour, not your own, to make the assessment:
   
   - What you're having done (eg, a boiler is different to double glazing)
   - Your home's size
   - The average occupancy for your size of home
   - Typical number of rooms not heated
   - Typical hours of heating used
   - Typical thermostat setting
   
   Your assessor will work out the average energy saving for a home of your type for that improvement. They will then compare it to your usage – whether your heating's on for fewer hours, whether you live alone or have a brood of six.
   
   Assessors have been advised to make very conservative estimates of savings, as well as factoring in future energy price rises. This means for most typical energy users, do it right and the true saving's likely to be more than the repayments, so you're quids in. However, if your usage changes, there's a risk it will go the other way (see point 14).
   
   Check your advice report carefully. It'll tell you what average savings will be, so compare your energy use to those. It should also say if you're a low user, and could lose out.

4. The Green Deal can be used for 40+ things, from double glazing and boiler upgrades to underfloor heating and loft insulation

   
   
   You could be eligible for one or a combination of the following. The only limit's how many improvements will be useful, and if they'll pay for themselves through Green Deal finance.

   Cavity wall insulation

   Most homes built since 1920 have a gap between internal and external walls. Filling the cavity with insulating mineral wool and foam means that cold air's kept out, and warm air in.

   Cavity wall insulation is one of the cheapest energy-saving home improvements, and pays for itself very quickly. Though if you're looking to do this, note you may be entitled to Free Insulation anyway.
   

   Double glazing

   Double-glazing your home means you're doubly protected - from your heat getting out and from the cold getting in. The layer of gas between the two windows traps heat inside.

   While it's expensive, so can take longer to recoup your outlay, double glazing could boost your home's value, as it's often top of buyers' wishlists.

   Draught-proofing

   Draught-proofing is where you check windows and doors, floors, loft hatches, electrical fittings and pipework for anywhere that cold air is getting in, then stop up the gaps.

   It's a simple measure with a big impact. It's also one you could easily do DIY - check out this Energy Saving Trust guide.

   Solid wall insulation

   Solid walls don't have a cavity gap between the internal and external walls - and they're much harder to insulate. It's common on houses built before 1920.

   Those with solid walls can choose whether to insulate them inside or outside. If outside, a layer of insulation material is fixed to the existing walls, and then covered with protective cladding/render. You can paint it, add brick slips, or even pebble-dash it.

   Inside means sacrificing around 10cm of room space along the whole wall. Here, you fix insulating boards to the existing walls, or build a fake wall and fill in the gap with insulating mineral wool.

   Internal solid wall insulation is much cheaper than external, but is more disruptive.

   New boiler

   Boilers are the biggest contributor to your energy bills. The more efficient your boiler is, the more heat it can produce from each unit of gas.

   Depending on how old your boiler is, you could save up to £300 a year by getting a new, efficient model. Think about insuring your boiler too - see our Boiler Cover guide.

   Heating controls

   Think of modern heating controls as having an all-knowing being in charge of your heating and hot water. You tell it the temperature you want, and it turns radiators on and off to keep that temperature level - 18-21 degrees Celsius is considered comfortable.

   The controls ensure you don't go from one extreme to the other, overheating the home, turning heating off, losing all the heat, then repeating the process again.

   Loft insulation

   Loft insulation's quick and cheap. It pays for itself very quickly. For a few hundred quid, you can stop up to a quarter of your home's heat escaping through the roof.

   It involves laying mineral wool under the rafters. You'll need to clear all the junk from your loft beforehand (or pay someone else to do it for you as part of the installation).

   Solar panels

   "Solar power? Hang on, we don't live in California!" It's actually about daylight, as panels can still generate some electricity on gloomy days - vital when the weather's as dull as watching Steve Davis watching paint dry.

   There are actually TWO types of panels. Thermal panels just heat water while photovoltaic (PV) ones generate electricity. It's PV ones which have sparked all the fuss, though you'll usually need a south(ish) facing unshaded, reasonably-sized roof.

   Underfloor heating

   Hate walking around on a cold floor? Underfloor heating can put an end to that. Heat rises, so if the heat's coming from your floor, then it'll heat the whole room. You'll be toes-ty warm in no time.

   Underfloor heating can be costly, depending on how big an area you want to heat. It's also disruptive as you need to take up any carpeting and floorboards to lay the cables or pipes. Underfloor heating works best if you have tile, stone or wood floors.

   Many more improvements

   You can also grab loans for a host of other improvements. Your assessor will flag up which ones are suitable. For a full explanation of all of them, go to the Energy Saving Trust.

   Air source heat pumps	Biomass boilers	Biomass room heaters
   Hard-to-treat cavity wall insulation	Chillers	Cylinder thermostats
   Duct insulation	Hot water showers (efficient)	Hot water systems (efficient)
   Hot water taps (efficient)	Fan assisted replacement storage heaters	Flue heat gas recovery devices
   Ground source heat pumps	Heating ventilation and air conditioning controls	High performance external doors
   Hot water controls	Hot water cylinder insulation	Mechanical ventilation with heat recovery
   Micro combined heat and power	Micro wind generation	Oil fired condensing boilers
   Pipe work insulation (lagging)	Radiant heating	Room in roof insulation
   Roof insulation	Sealing improvements (incl ducts)	Secondary glazing
   Solar blinds, shutters & shading devices	Solar thermal hot water heating	Transpired solar collectors
   Underfloor insulation	Warm air units	Waste water heat recovery devices (in showers)
   Water source heat pumps	Variable speed drives for fans and pumps

5. To get the Green Deal, you need to pay an assessor about £120 to visit your home. So do a speedy home check-up first

   Okay, to be eligible for this, you're going to have to shell out upfront, annoyingly. However, the assessment should be useful, even if you don't end up getting the Green Deal.
   
   The assessor comes to inspect your home and works out where, in an energy sense, it's leaking cash. (To see if it's leaking in a money sense, use our Money Makeover guide). They also check your energy bills, and ask questions about your usage.
   
   You should get your report a few days after the assessment. This'll flag up potential energy-saving improvements and how much you could save. Plus it'll highlight any extra subsidies you're eligible for (read more on getting it free).

   • Do a free speedy home check-up first.
     Don't shell out for an assessment before doing an online check first. The easy 'n' speedy way to see what improvements could help is answering a few questions on 1 Green Place's Home Survey tool (this is from an assessor organisation, so be aware it may contact you). If you get an assessment but don't qualify, you won't get your cash back.

   • It's not a fixed fee - some may do it cheaper.
     Assessors must be members of the Green Deal scheme, and there are around 220 organisations to choose from. Some are nationwide, some are local outfits serving specific areas - search for an assessor near you.
     

     Costs for the assessment vary from £99 to £150, but £120 is typical.

   • Check whether your local authority has cash for assessments
     

     In July 2013, the Government put up a £20 million fund that local authorities can apply for to promote the Green Deal in their area.
     
     In the past, this has resulted in local authorities offering free assessments. It's worth checking if your council has applied for a grant and what they're doing to promote the Green Deal.

   • You may get the assessment cost back.
     Many companies that do assessments also carry out home improvements. Often these firms will take the assessment fee off the improvements' cost if you choose to do the work through them. Remember, you're free to pick other companies too, so always compare prices.

   • Watch for the assessor's cross-sell.
     Remember many (but not all) Green Deal assessors are attached to a company that can carry out the work for you.
     

     They could try to flog a conservatory or new kitchen at the same time. Be wary and know you DON'T need to agree to this. If you just want an assessment, you are allowed to do just that.
     

     Assessors sign up to a code of practice, where they won't cross-sell if you don't want them to. They should inform you if they get commission from providers for recommending certain products in the assessment.

   • Can't afford the assessment? You may be eligible for other help.
     Call the Energy Saving Trust on 0300 123 1234. It will tell you if you're eligible under Energy Company Obligations for any free assistance without going through the Green Deal scheme.

   • How do I find a good Green Deal assessor?
     All assessors do the official training before they can inspect homes for energy-efficiency improvements. Check that they have the Green Deal Quality Mark.
     

     The best way to check an assessor is to quiz them over the phone before booking. Even now, a few months into the scheme, some assessors are just setting up and haven't done many assessments. Chat to a few and go with your instinct.

     
     

     Around 20,000 assessments have been carried out since the start of the scheme, so there should now be experienced assessors out there.

   • An assessor's just cold-called me. Is this legit? We've had reports of some people being called up out of the blue and given the spiel about how much they can save on their energy bills, then asked for £300 for someone to come round and do an assessment.

     
     

     Most assessors charge less than £150, so £300 is high. Don't be pressured into signing up to anything or paying any money upfront if you're unsure.

   Let us know what you think. Will you be doing the Green Deal? If not, why not? Discuss The Green Deal.

6. If you're doing it, go quickly. You could grab £100s of cashback

   The Government is keen to get the Green Deal running, so has put £125 million into cashback for first adopters. If you go quick (and do it right), you're be a lot better off. So hoorah!

   Examples of cashback on offer
   Improvement	Cashback
   Loft insulation	£100
   Cavity wall insulation	£250
   Solid wall insulation	£650
   Draught-proofing	£50
   Boiler upgrade	£270
   Double glazing	£320
   Heating controls	£70
   These are rates for England and Wales. They're guaranteed for the first £40m of cashback, but the rest of the promised £125m could be at lower rates.

   Importantly, the cashback's available even if you don't take a Green Deal loan - but you do need to get a Green Deal assessment and agree a quote for the work through a Green Deal provider, even if you're paying upfront.

   You can grab cash for each improvement you do. So if Anita Improve whacked in a new boiler, double glazing and loft insulation, she'd get £690 back in total.
   
   Cashback is capped at 50% of the amount you contribute to the work, whether upfront or through payments (it excludes any subsidies you get).
   
   If your assessor recommends loft and cavity wall insulation, you need to do them or you won't be eligible for cashback for other improvements, as they're seen as the basics.
   
   In Scotland, you can get a max of £1,200 cashback. Up to £500 per person's available for insulation measures, £400 for a new boiler and up to £300 for other measures. Its scheme works slightly differently - there's a full rundown on the Energy Saving Trust Scotland site.
   
   In England and Wales, if you're eligible, you need to apply for cashback from the Government with details from your assessment and the agreed quote from your provider. The Government will confirm your details and transfer the cash into your bank account.
   
   There's a full list of cashback on offer on the Green Deal site.

   How does the first come, first served work?

   The size of the cashback you can get varies with time. Only the first £40m of cash paid out will definitely get the rates in the table above. But there's another £85m worth of cashback under the scheme, which is likely to be at lower and lower rates until it runs out.

   So to make sure you get max cashback from the Government, go quickly.

   The cashback's triggered when you agree a Green Deal Plan (to complete the home improvements) with your provider, not when you get an assessment.

   To get the cashback, the work must be completed within three months of agreeing a plan (six months for solid wall insulation). Check your provider has time to finish in that period.

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7. The people who'll benefit most from this are higher users who live in cold houses and worry about turning the heating up

   Sadly, many people feel squeezed by heating costs, and cannot afford the simple home improvements needed to cut their fuel bills.
   
   If you live in a chilly house and worry about bills, it's worth considering. It should help you turn up the heat at less cost, or turn on the heat without panicking about the wallet impact.
   
   The Green Deal could also work for you if you're a high user already because then the likely savings you'll make from the improvements will outweigh your repayments and generate cash for you. Repayments are based on average use, so if you use more, your savings are likely to be bigger than your repayments.

8. The loan is attached to the home, not you. If you move, the next owner pays

   The loan is attached to your home's electricity bill, not you. So if you sell or rent it out, the new occupiers will make the Green Deal payments through their bills, in exactly the same way as you do.
   
   What will this do to my house price?
   
   It's still unclear. The Green Deal finance scheme is still in its early stages, so there've been few 'loans' granted. Almost certainly no one who has taken the finance has tried to sell their home in the few months since the scheme started.
   
   However, Government research has shown that, for example, a home with a B energy efficiency rating fetches an average of £16,000 more than one with a D rating. It's likely double glazing and new boilers are top of many homebuyers' wishlists, as is a warm and cosy home.
   
   Yet there is always the chance being tied to a 'loan' could frighten some. It may become a trend that people ask sellers to reduce the price of the property by the remaining cost of the loan, or pay the loan off in full (though watch out for early repayment charges).
   
   We asked an estate agent for their view of what buyers might think. Paul Masters, director at Kinleigh Folkard & Hayward, said:

   “Eco-conscious buyers may welcome energy-saving improvements and not worry about taking over the loan. But those who are already worried about loan repayments and getting a mortgage may be completely turned off and prefer to buy a property without it."

   I'm selling my house. How will buyers know I have the Green Deal?

   If you're selling up, details of the Green Deal repayments will automatically appear on the Energy Performance Certificate or, in Scotland, the Recommendations Report. One of these is needed for every house sale.

   Property owners must make potential buyers aware that Green Deal repayments are attached to the house, at the latest before the seller accepts an offer. If the buyer agrees, the seller needs to get a Green Deal agreement in writing.

9. If you've got the upfront cash, you can still get the Green Deal without the loan, including cashback. This can be bonza

   The loan is designed to help people who don't have the upfront cash to pay for improvements. Green Deal loans run for decades, and the interest costs soon mount up. If you can pay upfront, avoid interest costs and bag the savings yourself.

   You don't have to take Green Deal finance to get cashback. But you still need a Green Deal Assessment and to do the work through a Green Deal provider, even if you're coughing up for improvements yourself.
   
   Overall, that's almost certainly likely to work out better for you (especially considering poor savings rates right now), though ensure you're not overpaying. There are no clever calculations we've found that enable you to work this, though let us know if you find one.

   Paying upfront vs getting Green Deal finance (over 20 years)
   New boiler and installation	Paying upfront	Borrowing the cash
   Cost of boiler and labour	£2,500	£2,500
   Cashback	£270	£270
   Interest rate	-	8%
   Length of time to pay off	-	20 years
   Repayment*/month	-	£21
   Interest cost	-	£2,520
   Total repaid	£2,500	£5,020
   Predicted saving from lower bills*	£5,040	£5,040
   Total saved over 20 years	£2,540	£20
   *Assumes savings and repayments are both £21/mth

   Don't let the huge numbers put you off unnecessarily
   
   Talk of "borrowing £2,500 and repaying £5,020" may seem very scary. Yet again, it's important to remember, even with this, the whole point is you should not end up paying more than you do now, because the reduction in your energy bill will cover the repayments.
   
   It's also worth noting that, assuming we have overall inflation over the next 20 years, the actual cost to you of repayments is less. As inflation rises, the value of money diminishes, so £1,000 in 20 years' time will buy less than £1,000 now. This diminishes the cost of borrowing – to an extent.

   I don't have the cash upfront, but want to pay off quicker. Can I use other credit?

   Let's take the example above - spending £2,500 on a new boiler and its installation.
   
   If you can pay off quickly, you could use a 0% spending credit card and never pay any interest, just like stumping up the cash upfront.
   
   If you need longer, then you could get a 0% balance transfer card when your interest free purchases period runs out on the first card, and get up to 27 more months interest-free to pay it off, paying a fee of around 3% on the balance transferred to do so.
   
   The other option is to get a bank loan. The best buy for a loan of £2,500 is 14.8% representative APR - which is a higher interest rate than the Green Deal finance. However, because you're paying it off quicker, you still pay less in interest over the total term.
   
   Using high street credit can be risky. Firstly, all will do a credit checks, and score more harshly than Green Deal providers, so it's not certain you'll be able to access the best deals.
   
   Secondly, if you're not extremely organised with money, you can end up paying representative APRs of up to 20% on these credit cards. Always stick to the terms and conditions in the credit agreement, or special 0% rates can be withdrawn.
   
   And finally, energy suppliers have to go through several processes to work out payment schedules with you if you get into debt with them. High Street lenders are under no such requirements, so you could find yourself facing debt collectors if you default.
   
   However, if you're money savvy and trust your ability to make payments on time, this can be a good way to pay off the home improvement more quickly, and start seeing evidence of energy saving in your pocket within a few years.

   High Street borrowing vs getting Green Deal finance (over 20 years)
   New boiler and installation	0% purchase card + 0% transfer card (1)	Borrowing Green Deal cash
   Cost of boiler and labour	£2,500	£2,500
   Cashback	£270	£270
   Interest rate	0%	8%
   Length of time to pay off	3 years 8 months	20 years
   Repayment/month	£57 (2)	£21*
   Interest/fees cost	£45	£2,520
   Total repaid	£2,545	£5,020
   Predicted saving from lower bills*	£5,040	£5,040
   Total saved over 20 years	£2,500	£20
   *Assumes savings and repayments are both £21/mth (1) Assumes 17mths 0% purchase card and 27mths 0% balance transfer card (2.9% transfer fee) - both current best buys. (2) Average repayment - minimum payments on the full amount at the start will be higher.

   Should I extend my mortgage to make home improvements?

   Borrowing more on your mortgage is another way to finance home improvements and one you need to think carefully about. If you've decent amounts of equity in the property then it's likely you can get the funding to do so.
   
   Work out how much it will cost you. Our mortgage calculator allows you to compare two different mortgages - so you can input the higher level of borrowing and work out the additional cost over the remaining term of the mortgage.
   
   The crucial question is: will you pay more than you would under the Green Deal over the different payment periods?
   
   Nationwide Building Society has a selection of Green Additional Borrowing products for existing mortgage customers wanting to make home improvements. These products are discounted by 0.5% from standard fixed rates and have no product fees.
   
   Nationwide says borrowing must go on home improvements, but the list of improvements qualifying for the discount is smaller than that available under the Green Deal.
   
   You need to think carefully before taking on additional borrowing, especially if it's secured debt where you could lose the property if you don't keep up repayments. Check that the extra repayments don't make the mortgage unaffordable - and whether that would still be the case if your interest rate was to rise.
   
   Get advice if you need it - consult an Independent Financial Adviser or a mortgage broker on what's the best deal for you.

10. You borrow over the long term (10–25 years), and there is interest attached

    If you choose to get a Green Deal loan, the effective minimum repayment period is 10 years, the maximum 25. The exact length depends on the energy-efficiency improvements you choose.

    • This is unsecured borrowing (better than secured). When you get a loan from a Green Deal provider, you also sign an agreement for unsecured finance. That's better than secured, where they can take your house if you don't repay – here, they can't.

    • The interest varies depending on the provider, so check. Providers usually charge interest on the loans - we're hearing rates of around 7%-11%. However, the finance scheme has only just been put in place, four months after the launch of the scheme.
      
      

      This is a frankly ridiculous state of affairs, and has put many off the Green Deal, who went in with good intentions, got an assessment, then found that the finance behind the scheme wasn't available.

      
      

      For background, the Green Deal Finance Company - a company set up to access the money markets and provide cash for the loans to providers - charges Green Deal providers 6.96% APR to borrow cash from it. It also has a set-up fee of £63, and an annual charge of £20 per loan.

      
      

      Providers can choose to pass these costs on, which is why the APR you face will likely be higher than 6.96% APR - these fees also mean that the APR varies with the length of your plan.

      
      

      Provider companies make money from the installation, so how they're choosing to structure the plan varies. Published details on APRs are hard to come by as plans vary so much, so get quotes from a few different providers and compare.
      

      Here are some examples of how much you could repay for different improvements:

    	Loft insulation (three-bed semi)
    Cost of work	£350
    Predicted annual saving	£175
    Interest rate	9.1%
    Typical payback time	10 years
    Monthly repayment (added to electric bill)	£4.50
    Total interest cost	£185
    Total repaid	£535
    Cashback	£100
    Customer saves each year	£120

    	Cavity wall insulation (three-bed semi)
    Cost of work	£500
    Predicted annual saving	£135
    Interest rate	10.9%
    Typical finance payback time	10 years
    Monthly repayment (added to electric bill)	£7
    Total interest cost	£325
    Total repaid	£825
    Cashback	£250
    Customer saves each year	£55

    And one improvement that won't fully pay for itself...

    	New boiler (three-bed semi)
    Cost of work	£2,500
    Predicted annual saving	£200
    Amount of finance borrowed	£1,300
    Customer's upfront payment at start	£1,200
    Interest rate	10.1%
    Typical finance payback time	12 years
    Monthly repayment (added to electric bill)	£16
    Total interest cost	£950
    Total repaid	£3,450
    Cashback	£270
    Customer saves each year	£10 (until repaid)

11. Be aware if the loan's longer than 15 years, there are early redemption penalties

    Your repayment is based on the predicted savings the energy efficiency improvements will give. The plan's maximum length is dictated by the working life of the improvement, though it must be between 10 and 25 years.

    You can make a full or partial early repayment above your contractual payments at any time. But if you decide to make an early repayment on a 15-year+ loan, your Green Deal provider may decide to charge you for compensation.

    Why does the Green Deal charge early redemption penalties?

    If your Green Deal Plan is longer than 15 years, your provider will be able to claim a limited amount of compensation to cover the loss they have suffered as a result of the early repayment.

    However, they must deduct the amount they could earn by re-lending the money on the market, plus any admin savings. If your provider is able to re-invest the money you repaid at the same or a better rate of interest, they shouldn't charge compensation.

    If you're in a position to make an early repayment, contact your Green Deal provider, tell them how much you want to repay, and ask them for a full settlement quote.

    We don't like early redemption penalties
    
    We think it's wrong for people to be afraid of repaying early because of the costs they could face. People should be encouraged to repay their debts as quickly as possible. To penalise people for doing this is something we've rightly seen regulation against in the private sector.
    
    We campaigned against it (and thankfully it was dropped) with student finance and we think the same should apply here.

    Only a few years ago, commercial lenders were banned from levying harsh redemption penalties and keeping people locked into loans. For the Government to do the opposite on a loan scheme it's developed sets a poor precedent.

    This problem is exacerbated as you may well need to repay loans when moving house in order to help the house sell, but because of the redemption penalties, you may not be able to repay.

    Got feedback or want to have your say?
    Discuss the Green Deal

12. The Green Deal won't cover pricer repayments' entire cost - you may have to stump up some cash upfront

    If an improvement won't pay for itself in energy savings over 10 to 25 years, then you can't borrow the full amount through the scheme. So you'll have to stump up any remainder. Improvements that fully pay for themselves are denoted by a green tick on your assessment, those that only partially do have an orange tick.
    
    Typical areas where you may have to pay
    
    If you go for one of the pricier improvements allowed under the Green Deal – such as solid wall insulation, costing £10,000 or more – the energy you save over 25 years is unlikely to cover the cost.
    
    This is also likely to apply other more expensive improvements, such as new boilers, double glazing, solar panels, replacement storage heaters and under-floor insulation.

    Here, you can only borrow the amount you would save on your bills, and must cough up the rest yourself. So carefully work out if you can afford it beforehand.
    
    There may be help
    
    However, you can be clever here. If you combine a low-cost, high-impact improvement (eg, loft insulation), with a high-cost, average-impact improvement, (eg, boiler), you may be able to use the savings from one to pay for the other. See combining improvements for more.

13. On a low income, in receipt of benefits or anyone looking for solid wall insulation? You may be entitled to free cash rather than a loan

    The big six energy suppliers (British Gas, EDF Energy, E.on, Npower, Scottish Power and Scottish & Southern) have obligations to help customers by providing cash to help them insulate and better heat their homes.
    
    Don't worry if you're not with the big six. This isn't just about suppliers helping their own customers - these big beasts just need to put money into the system.

    Who's eligible for assistance?
    
    If you earn less than £16,000 household income and own your home, you're likely to be eligible for help. The amount you're eligible for is means tested. You're likely to get higher amounts there are ill or disabled people, children or older people living there.

    For more info on help with costs and how to apply outside of the Green Deal, call:

    • The Energy Saving Advice Service (England & Wales): 0300 123 1234
    • Home Energy Scotland: 0808 808 2282

    How to get assistance under the Green Deal
    
    If you think you're eligible for help, and you want to take part in the Green Deal, discuss this when you get your home assessed for Green Deal improvements.

    Also, talk to your Green Deal provider when you agree a plan. They will contact the energy companies for you, access any discounts you're eligible for, and take this off the total cost of your plan.

    Who is eligible for Eco subsidies?

    There's wads of free cash on offer to people on certain benefits to install free loft or cavity wall, plus help pay for double glazing, new boilers and more. Double glazing has never been eligible for grants before.

    For example, someone living in a private home on Income Support could be eligible for Government help to pay energy bills during winter, plus the following help from energy companies:

    • Renewable Heat Premium Payments of between £300 and £1250 to install solar, biomass or wind technology

    • Energy Company Obligations, consisting of:

      • Affordable Warmth Obligation. This helps with heating and insulation (boiler subsidies, loft insulation, double glazing, etc).

      • Carbon Saving Obligation. Subsidies for hard-to-treat homes - solid or cavity wall insulation.

      • Carbon Saving Communities Obligation. Subsidies for the poorest 15% of communities (some of this subsidy cash is reserved for rural areas).

    	Private tenant on income- related benefits.	Living in rural social housing & on benefits	Living in a low income community	Living in an older home	Anyone else
    Cavity wall insulation	Yes	Yes	Yes	Yes	Yes (if hard to treat)
    External/solid wall insulation	Yes	Yes	Yes	Yes	Yes
    Loft insulation	Yes	Yes	Yes	No	No
    Heating improvements	Yes	No	No	No	No

    Help with solid wall insulation for everyone

    About 6.6 million homes in Britain were built with solid rather than cavity walls - 31% of the total housing stock.

    Solid walls are much harder to insulate than cavity walls. With a cavity wall, you can often easily fill in the cavity with foam and mineral wool for less than £500. However, to insulate a solid wall, you need to add material either to the outside or the inside of a wall.

    This is why the Government negotiated with energy companies to give Eco assistance to anyone insulating a solid wall. External insulation can easily cost £12,000 and internal insulation from £5,000.

    	Internal solid wall insulation
    Cost	£5,300
    Eco subsidy	£2,724
    Green Deal finance taken	£2,576
    Annual efficiency saving	£273
    Interest rate	8.3%
    Payback length	25 years
    Monthly repayment	£20.39
    Total interest cost	£3,542
    Total repaid by customer	£6,118
    Cashback	£650
    Additional saving on bills per year	£39

    Internal solid wall insulation

    If you install solid wall insulation inside, it will mean you sacrifice some room space. It can be done by building a fake wall and filling in the gap with insulating mineral wool, or installing insulation boards directly onto the walls.

    It's tricky in that you will need to remove skirting boards, radiators, and anything else attached to any wall that needs to be insulated. You'll also need to ensure the wall is free of damp first.

    Perhaps the biggest impact will come from the fact that it'll make your rooms smaller. Internal wall insulation is usually around 10cm thick, so you'd lose this space from every room that has external walls. However, internal solid wall insulation is by far the cheaper option.

    External solid wall insulation

    	External solid wall insulation
    Cost	£10,000
    Eco subsidy	£5,097
    Green Deal finance taken	£4,903
    Annual efficiency saving	£500
    Interest rate	7.7%
    Payback length	25 years
    Monthly repayment	£36.86
    Total interest cost	£6,159
    Total repaid by customer	£11,062
    Cashback	£650
    Additional saving on bills per year	£58

    External solid wall insulation is done slightly differently. A layer of insulation material is fixed to the existing walls, and then covered with protective cladding/render, which you can paint, add brick slips to, or even pebble-dash!

    Because this changes the external appearance of your home, you'll need to find out from your local planning authority whether you need permission.

    External wall insulation is also less disruptive, as you won't need to remove any fittings. Your installer applies the insulation directly to the wall. And you won't lose any space in your rooms. Again, you will need to sort out damp.

14. If the savings you're predicted to make don't happen, you could pay more than you actually save

    This is a slight wobbler. I wouldn't let it put you off too much, but it is a risk that needs thinking through. Throughout this guide, we've written "you only repay what you should save", yet technically, that's not always true. The actual savings need to match up with your total repayments.

    Imagine Ima MoneySaver is a very low energy user living alone in a large house. If she got a new boiler, the average saving for a home of her type is £300 per year, so this is the figure used to set her repayments and plan the length of her loan. She will pay back £25 a month until both the loan and interest is paid.

    However, she's a low user, and that isn't factored in (it's about the home, not the user, so if she moved the next tenant may be a high user). So she might only save £18 a month, because she uses less energy than the average. Therefore there would be a genuine net cost.

    Having said that, in time the saving should grow, simply because energy bills are rising so rapidly. Iif the saving stays at the same proportion, the cash amount would rise, so in a few years' time, she's likely to be saving as much as her repayments, and after that may even make savings over and above her repayments.

    All Green Deal assessors will ask to see your energy bills, classify you as a low, medium or high user, and predict your true savings. Your advice report will spell out if it's a good deal for you. Use these figures to work out if it's the right time to make energy efficiency improvements.

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15. Get at least three quotes for the work and don't be afraid to haggle (you only need one assessment). Many assessors and installers are salesmen - Green Deal double-glazing is still double-glazing!

    
    
    Get at least three quotes
    
    Once you've got your advice report, that's your assessment done. So now get quotes from at least three Green Deal providers. They will quote for the work and devise a repayment plan (if you don't want to pay upfront).

    Never be pressured into signing anything without getting other quotes first.
    
    Don't be afraid to haggle
    
    The installation and fitting industry has often operated by giving sky-high quotes to people, hoping they'll accept them, but being ready to knock them down if they become customers. We've heard of people being quoted £15,000 for double-glazing but eventually getting it for £2,000 – showing the scale of the discounts.
    
    So far the Green Deal is too new for us to know how it will go, but don't be afraid to haggle (please report your Green Deal haggling experiences).
    
    Because this is a scheme based on the market, there are no Government rules on how much things should cost. So, as with any other home improvement, do some research to find out how much you should be paying, then compare quotes.
    
    If you've agreed finance, you don't pay your installer anything
    
    Once you've agreed on a quote, your provider will appoint an installer to do the work agreed under your plan. The whole idea of the Green Deal is that you can make improvements with no upfront cost.
    
    So, any Green Deal installer who tries to charge you anything when they do the work is wrong. It's worth checking when they arrive at your home that they're aware of the payment arrangements, and contacting your plan provider if there's a problem.

16. Combining improvements can, bizarrely, make Green Deal loans more affordable

    The most important thing to understand on this is that you cannot borrow more under the Green Deal loan than what your energy savings will allow you to repay.
    
    So imagine you want to get double-glazing, not just for energy efficiency savings, but, say, to cut noise pollution. It's so expensive, the energy bill savings won't cover its cost in the maximum 25 years loan length, so you can only get a loan for some of the cost.
    
    However, now consider loft insulation and/or cavity wall insulation. These cover their costs in just a few years, but loans must be spread over at least 10 years, effectively leaving you spare borrowing capacity.
    
    So if you combine the two, you can use that loft and cavity wall insulation capacity to borrow more for the double-glazing, repaying quicker because of it.
    
    Though, of course, borrowing more means repaying more, and more interest (though it should be covered by an energy saving).
    
    The table below sets out an example, and should make it clearer.
    

    	Double-glazing only	Loft insulation, cavity wall insulation & double-glazing
    Installed cost	£4,000	£5,000
    Annual efficiency saving	£180	£565
    Amount of finance allowed	£1,950	£5,000
    Customer's balancing payment at outset	£2,050	None
    Finance payback time	25 years	15 years 4 months
    Interest rate	7.9%	7.9%
    Monthly repayment	£15	£47
    Total interest cost	£2,530	£3,550
    Total repaid	£6,530	£8,550
    Cashback	£320	£670
    Customer's energy saving each year	£0 (until repaid)	£0 (until repaid)

    Let us know what you think. Will you be doing the Green Deal? If not, why not? Discuss The Green Deal.

17. Even though you repay the bill through your electricity provider, you are still free to switch provider to cut costs

    Once a year, you'll receive a Green Deal statement from your provider that shows how much you've paid, and how much you still owe. Therefore, you're never shelling any cash out (apart from for your electricity bill, obviously).
    
    Yet you are still free to switch
    
    Don't, for heaven's sake, think this locks you into your energy provider so you can't get cheaper bills (join the MSE Cheap Energy Club to stick on permanently low prices).
    
    Provided the energy company is a member of the Green Deal scheme, which all the big six - British Gas, EDF Energy, E.on, Npower, Scottish Power, Scottish & Southern - are, then you are free to move.
    
    No smaller energy providers are yet signed up, but the Government hopes some will opt in during the coming months.
    
    Switching will work no differently than it does now. There'll be a central Green Deal plan register, which means energy companies will know when you switch that there's also a Green Deal Plan to switch too.

18. If it breaks after the warranty runs out, you may still have to repay

    Most Green Deal equipment comes with a five-year warranty for the equipment, and 10 years' warranty for any building damage caused by the installation. Cavity and solid wall insulation have a full 25-year warranty.

    Many Green Deal improvements have extremely lengthy repayment periods. So if your new boiler breaks in year eight, its warranty will have expired. You'll need to pay to fix it, but you'll also still have to pay your Green Deal provider each month.

    Some Green Deal Plans require you to get annual services on the improvements or risk invalidating the warranty – another thing to check when agreeing a plan. This is a good thing because you'll still have a warranty, but the service will probably cost you.

19. The Green Deal has STRONG consumer protection rules. If you're given the wrong advice, take it to the Ombudsman

    
    
    Green Deal assessments in your home are covered by door-to-door selling regulations, which mean you have seven days to change your mind. Even so, NEVER, EVER sign up to anything on the spot - take your time to think about it.

    Some installations may need additional work - eg if you're getting underfloor heating, you may need a joiner to take up/replace the floor, as well as a heating engineer to install the heating.

    The Green Deal Code of Practice requires that any other tradesmen involved who aren't Green Deal Installers are members of other Competent Persons schemes, such as TrustMark.

    How to complain

    Various ombudsmen and regulatory agencies deal with complaints, though your first port of call should be your provider. If they can't resolve your complaint, contact the Green Deal Ombudsman or, in specific cases, other bodies:

    • Problems with the Green Deal: You can complain to the Green Deal Ombudsman or call on 01925 530 263.
      
      The Ombudsman has the power to investigate complaints and decide whether to take action. It can require energy companies to remove charges, or provide a service. They can force providers to give an apologies or explain, and, if appropriate, give up to £25,000 compensation.
      
      If you accept the Ombudsman's decision, it's binding on you and the company. If you don't accept it, you're free to pursue other redress, for example, through the courts.
      
      If a service was mis-described, you may want to get the Office of Fair Trading or your local Trading Standards Institute involved.

    • Problems with energy companies: You can report the energy company to its regulator, Ofgem. It builds cases against energy companies, and fines them for large-scale mis-selling or unfair relationships. If you have a specific complaint, it's best to go to the Green Deal Ombudsman above.

    • Problems with your Green Deal finance contract: If your complaint directly regards the Consumer Credit Act, rather than a company's conduct, you need to seek help from the Financial Ombudsman Service or call it on 0800 023 4567.
      
      However, if your complaint is regarding how your repayments are being taken, for example, you should go to the Green Deal Ombudsman.

20. The Green Deal's a big move. First ensure you're on the cheapest energy tariff and do the energy-saving basics

    Ditch and switch energy provider and you can £100s a year. Our Cheap Energy Club checks you're on the cheapest deal and handles the switch for you. Plus to encourage you, there's up to £30 extra if you switch via the club.
    
    It's the same gas, the same electricity, the same safety. All that changes are the customer service and the price you pay.
    
    Normally, switch and you risk the provider hiking prices, or giving you a cheap deal for 18 months then ramping costs. So every month, without you doing anything, we do a comparison for you, and alert you when it's worth switching again.
    
    Once you've switched, if you wander round the house in boxers or bra 'n' knickers with radiators on full and windows wide open... STOP IT!
    
    Sensible changes can save your large, from draft excluders to setting washing machines to 30°C and low-energy light bulbs to notching down the thermostat. Try the Energy Saving Trust for more energy-saving tips.
    

    Martin's final thought - is it worth it?
    

    That's the mythbusters done, so hopefully you now understand how the scheme works.

    Deciding whether it's right for you depends on your home and finances. From a purely financial perspective, provided the work qualifies for full financing, it seems a good bet for those keen to improve their pads who can't afford to shell out upfront for major improvements.
    
    The simple reason for this is that your home will be a nicer place to live in, even though you won't have to pay out any more than you do now. But if you can afford to shell out upfront, then it's likely better to do this, so you don't pay any interest costs.

    For smaller improvements the assessment's cost is proportionately larger, so needs factoring in more. Though, right now, with cashback on top, that should be more than covered, making that simple too.
    
    Those are the easy bits though. This is a new scheme and there are still many unknowns, not least the belated finance scheme, only just getting going. We also don't know how assessors and installers will act. So there is still an element of a gamble.

    For more on the Green Deal see Martin’s blog: How to make the Green Deal more popular.

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