A solar system is a great way to save money on energy bills and make a home more eco-friendly. Since installing solar panels takes a lot of time and money, many people seek to buy a property with already existing ones. One of the biggest questions they have is how buying a house with solar panels can affect getting a mortgage.
Below, we will take a close look at how panels can affect a mortgage deal. Then, we’ll give you advice on how best to handle buying a solar-powered property. Read on!
Buying a Home With a Solar System
The main factor that affects whether you will have problems getting a mortgage when buying a home with solar panels is who owns those panels. Basically, there are two possible scenarios.
The Homeowners Own the Panels
This scenario is the simplest and most desirable one. The home sellers have already paid for the panels, and they want to sell them along with the house. Thus, no debts or loans are attached to the solar system.
As a buyer, you are extremely unlikely to have any trouble getting a mortgage in this case. The applications are usually handled rather quickly. However, make sure the mortgage fits your financial needs as well as the home you wish to purchase.
The only factors you should inquire about are the panels’ installation year and their current state. If they aren’t older than five years, purchasing them along with the home is a wise idea. They will serve you for at least another ten years and significantly lower your utility bills.
On the other hand, if the panels are older than 5 years, you will most likely have to replace them soon. In such circumstances, buying them along with the home might not be a favorable investment, as they will only increase your cost of living.
It is important to ask the sellers to give you all the crucial information about the state and age of the panels first. Knowing such details will help you make a sensible decision.
The Homeowners Do Not Own the Panels
Things get a bit more complicated if the panels are leased. When a solar system is leased or rented, it means that the current homeowners are still paying them off according to the loan plan they agreed to. After selling the house, those obligations might transfer to you.
Either way, leased solar panels can significantly complicate your mortgage application. Some lenders might not allow loans for properties under any type of lease. On the other hand, those that do might have stricter rules for such purchases.
If the financial responsibility for the lease transfers to the new owners, mortgage companies will want to work that into their affordability assessment. That can, in turn, change the amount of money you will get and prolong the entire process.
Alternatively, the sellers might be the ones who will keep paying off the panels. If that is the case, mortgage providers will have a range of legal requirements for the parties. These requirements will ensure that the sellers pay off the panels. In addition, they will guarantee that any bills for using the panels go to the buyers. Once these conditions are met, the lender will authorize the mortgage loan.
To Sum Up
Buying a home with solar panels can indeed affect getting a mortgage. However, with the number of solar-powered homes soaring, more and more lenders are coming up with ways to include panels into their deals.
If you want to buy a house with solar panels, you should inquire whether there is a lease on them or whether the seller owns them. That information will help you determine what type of mortgage deal you need and whether buying the home is truly worth it.