Apply for a Secured Loan
If you want to access better interest rates but don’t have strong credit, consider a secured personal loan that uses your home as collateral. Banks like ANZ and ASB offer home equity loans at rates starting from around 5% for substantial projects like a heat pump hot water system. This type of loan gives you access to lower rates by securing the debt against your property. Make sure you understand the risks, as defaulting on payments can put your home at risk. Two major banks are shown below to give you an idea of the details, but check your own bank as well for their offering in this space.
ANZ Bank Good Energy Home Loans
ANZ Bank offers competitive loan that can fund your heat pump water heater purchase and installation. With ANZ, you can borrow between NZ$3,000 to NZ$80,000 and take up to 7 years to repay. Interest rates start at just 1% p.a. This interest rate is fixed up to a duration of 3 years. After that, you will be able to pick one of their special interest rates based on your eligibility.
ASB Better Homes Top Up
ASB Bank provides personal loan options that can cover your heat pump system costs. This loan has a fixed interest rate of 1% p.a. up to 3 years. It allows you to get up to $80,000 per property. To be eligible for this loan, you should be an existing ASB home loan customer. You will also need to have minimum equity of 20% for the owner-occupied properties. If you are getting this loan for an investment property, you should have an equity of at least 20%. Apart from the hot water heat pump, you may use this loan to insulate your home, get a hybrid car or an EV charger, and even to install solar panels.
BNZ Green Home Loan Top Up
BNZ Bank provides a home loan top up option that can cover your green home upgrade. This loan has a fixed interest rate of 1% p.a. up to 3 years. It allows you to get up to $80,000 per property. To be eligible for this loan, you should be an existing BNZ home loan customer. Apart from the hot water heat pump, you may also use this loan to upgrade your transport such as an EV car.
Westpac Bank Warm Up Loan
Westpac Bank Westpac Warm Up loans are offered to homeowners and landlords who are either new or current customers of Westpac’s Choices Home Loan. Up to $40k interest-free for 5 years to invest in a solar power system and/or batteries to store solar energy for a warmer, dryer, healthier and more energy-efficient home.
Kiwibank Sustainable Energy Loan
Kiwibank home loan customers can top up their home loan to cover the cost of installing a hot water heat pump. Kiwibank will pay for the installation of the energy system for the house that is held as security by Kiwibank. If the total amount borrowed exceeds $5,000 for the installation, Kiwibank provides a lump sum payment of $2,000 over four years.
The lump sum payment will be $800 for the first year and $400 for each of the following three years. If you already have a home loan with Kiwibank, they will waive the fee for topping up your home loan.
Use an Interest-Free Credit Card
Another option is to charge the heat pump system on an interest-free credit card, which provides 0% financing for a set promotional period. Most major banks offer credit cards with 12-18 months of interest-free financing on purchases, giving you over a year to pay off your heat pump without incurring any interest charges. Just be sure to pay off the balance in full before the 0% introductory period ends to avoid high retroactive interest.
Take Advantage of Retailer Financing Deals
Many heat pump retailers and installation companies offer financing promotions to help make purchases more affordable. Retailer financing deals allow you to spread out the cost over 6 months to 5 years. Offers may include deferred payment plans, discounted interest rates, and no deposit options. Just keep in mind that retailer interest rates are often higher than traditional lenders. Be sure to read the fine print and compare financing costs.
Consider a Heat Pump Rental
Some heat pump suppliers offer rental or lease-to-own programs that allow you to pay a monthly fee to rent your system. Monthly rental fees are often comparable to loan repayment amounts. A rental avoids large upfront costs and can include maintenance and repairs for greater peace of mind. If your budget is tight, an equipment rental could make a heat pump water heating system more accessible.
Use a Personal Loan
Save Up Over Time
If you want to avoid financing costs and debt, another option is to simply save and budget for your heat pump system over time. By tucking away a certain amount each month toward your goal, you can accumulate the cash to fully pay for your purchase when ready. While this option requires diligence and patience, it lets you avoid interest payments and finance charges down the road.
Install in Stages
Some homeowners choose to take a phased approach by installing just the heat pump first, then adding storage tanks later on. Going with a staged installation can help spread out costs over time. Just keep in mind you may need to pay for a second installation fee when adding tanks.
Explore All Your Financing Options
Installing an energy-efficient and climate-friendly heat pump water heating system is a major investment that can pay off in the long run through lower energy bills and reduced carbon emissions. While the upfront costs may seem daunting, there are many financing options to make heat pumps affordable for New Zealand households. Be sure to thoroughly research grants, loans, credit options, retailer deals, and other financing strategies to find the right approach for your budget and financial situation. Investing in a heat pump system can help shrink your home’s carbon footprint and save money over time with lower energy costs.
We’re happy to look at your situation with you and recommend options. Just contact us at 0800 497658, and our friendly team will be able to organise a visit to your site at a time that suits you.
At Hot Water Solutions, our hot water heat pumps world class and we look forward to helping you!