Interest-free Loans for Home Retrofits

This measure offers up to $40,000 in interest-free loans to eligible homeowners and landlords to complete deep home retrofits recommended through an authorized EnerGuide energy assessment.

This measure builds on a program put forward in the 2020 Fall Economic Statement, which provided funding for up to one million free energy audits and up to 700,000 grants of up to $5,000 for homeowners to complete energy efficient home improvements.

Total loan amounts over the 5-year program period were based on the program’s stated cash profile, net of operating and loan disbursement expenses. Yearly loan amounts were projected using the uptake profile from the 2008-2012 (Fiscal Years) EcoEnergy Home Retrofit program. Loan repayment was assumed to be evenly distributed throughout a 10-year period, with payments beginning exactly one year from the date of the initial loan.

Interest costs paid by the government were calculated using projected outstanding loan amounts and a blended average of PBO projections of Canada’s 10-year bond and 90-day bill rates. Costs associated with Loan Loss Provisions were calculated using a 10-year average of mortgage default rates, with costs being spread evenly over the course of the program’s repayment period.

Operating costs were calculated using the ratio of operating costs to loan costs for the Canada Small Business Financing Program. Additional administrative costs were assumed to be small relative to other cost categories.

The loan disbursement and operating cost profiles were based on historical data for similar programs. Loan default rates were assumed to be similar to historical mortgage default rates. Total interest costs are sensitive to fluctuations in the government’s cost of borrowing.

• Estimates are presented on an accruals basis as would appear in the budget and public accounts.
• Positive numbers subtract from the budgetary balance, negative numbers contribute to the budget balance.