Will the bank accept a house with solar power?

More Australians are choosing to live in more regional locations to escape the hectic city life.

However, it’s common for large rural blocks or hobby farms to have no or minimal access to basic utilities like town water, gas or even electricity.

Many of the properties just rely on solar panels to get their energy but is this acceptable to lenders?

How much can I borrow?

You may be able to borrow up to 95% of the property value, or up to 100% with a guarantor, for a home with solar panels if you can meet certain requirements:

  • Connection to power: Whether it is power poles or solar panels, the property valuer will be checking to see that the property has working power.
  • Access to water: You must have access to either town water or tank water (your borrowing power will be limited to 80% for bore water access).
  • Connection to sewerage services: There needs to be a proper system in place to manage waste such as a built-in septic tank.
  • Land size: Your rural block is more likely to be approved if the block is less than 50 hectares (ha).
  • Location: Most lenders have their own postcode restrictions and will require your property to be within 100km a major city or regional town.
  • Zoning: Properties zoned industrial, commercial or agricultural will generally fall under commercial farm lending.

Call us on 1300 889 743 or fill in our online enquiry form to discover if you’re eligible for a home loan to buy a property with solar panels.

Why do lenders have a problem with solar power houses?

Lenders are not adverse to solar panels, specifically.

The issue is that the majority of properties off the electricity grid tend to be in rural or semi-regional locations.

Lenders are always concerned about the market for a unique property in a unique location. That’s in the event that they had to sell your property in case of default.

For standard properties in metro locations, many banks will complete what is known as a “kerbside valuation” to determine that there is, in fact, a property on the block.

For unique properties, a more thorough valuation is required so there is a bigger chance for the valuer to flag potential issues with the property that will reduce their final valuation.

On top that, it can be difficult for the valuer to find comparable sales, especially if neighbouring properties are many kilometres away.

Luckily, each lender has different risk appetites and our mortgage brokers can often negotiate approvals with the key decision makers in the credit department.

Why solar panels can be a better option than power poles

If a rural property doesn’t have electricity, one solution is install power poles to the connect the closest power lines.

This can cost you roughly $10,000 per pole plus another $10,000 charged for transformers, cables, and removal of any trees in between the property and the closest electricity grid.

It is not uncommon for a larger lifestyle blocks to be half a mile away from the nearest electricity grid making it ridiculously expensive to run the power lines up to the property.

For small household consumption, solar panel installation can cost you less than $5,000, not to mention save you thousands in electricity bills over the long-term.

The long-term investment benefits over solar panels

  • Successive Australian governments have, and will likely continue to, provide rebates on solar power installation.
  • You can save thousands of dollars every year, if you produce more electricity than you consume, then the power will be added back to the grid and you can get further rebates!
  • Within 5-6 years, your solar panels will likely have paid for themselves.
  • For investors, lower energy bills are a great selling point for any potential tenant.
  • Solar leasing is an option offered by energy providers that allows you and your tenant to avoid much, if not all, of these upfront costs of installation.

Disclaimer: The information above shouldn’t be taken as financial advice. We recommend that you talk to a financial professional before you make any financial decision.

Need a home loan to buy a property with solar power?

We have a team of credit experts who have years of experience and understand how to present a strong case to get your rural property mortgage approved.

Give us a call on 1300 889 743 or fill in our free online assessment form today.

  • GGardiner

    What is it that determines whether my property will be considered a commercial farm or a hobby farm?

  • Hi GGardiner, the valuer’s assessment will usually determine whether your rural property is a commercial property or a hobby farm. However, if your case is strong enough and you can prove that you can make the loan repayments without using any income from the farm, then some lenders may consider your application for a standard home loan.

  • Piers B

    I want to buy a 55 ha property. Can you help me secure the loan? Where can I send details?

  • Hi Piers,

    Yes, our mortgage brokers should be able to help you with this. You can email us your details at info@homeloanexperts.com.au or simply call 1300 889 743 to speak with one of us directly.

  • sub

    Hi, I’m thinking of selling some of my produce from the hobby farm. Will banks consider this to be a commercial farm now?

  • Hobby farms are usually non-income-earning rural property generally used as a recreational pursuit with no intention whatsoever of making money out of it. You may earn a bit through selling the produce but banks may identify it as a commercial farm depending on the revenue and if that’s the only source of your income.

  • Mack

    What does it take to qualify for the first home buyers grant?

  • Hello Mack.
    The first home owners grant is available to people buying or building their first home and who can meet certain qualifying criteria. Please check this out under the “First Home Owners Grant eligibility criteria” section here:

  • Kelly

    I’d like to invest in a property but not sure which one’s the most suitable. Is there any specific property-type that would be best for a first time investor like me?

  • Actually, there’s no single property that can be classified as the most suitable property to buy in Australia. That’s because your objectives and goals determine which property type is a better buy for you. Before you set your eyes on any single property, make sure it can work accordingly with your goals:. Please check out this page for further clarification on this: