At Advanced Energy Systems, we understand that investing in solar energy is a significant decision for homeowners. One common question we hear is: What happens to my solar loan if I move? Can I transfer the loan to the new owner?
This is an important consideration, especially for homeowners who are still deciding whether to stay in their home long-term. Moving is a reality for many, whether it’s due to job relocation, family reasons, or changing housing needs. Understanding the financial implications of a solar loan when selling your home is crucial for making informed decisions. In this article, we’ll provide clarity and help you navigate the complexities of transferring or settling a solar loan if you plan to move in the future.
What Happens to My Solar Loan If I Move?
When you install solar panels, you’re making a long-term investment. However, life can change, and you may need to move within a few years of installation. If you have financed your solar system, the main question becomes: What happens to your solar loan if you sell your home?
In general, most financing agreements for solar systems are not automatically transferable. This means the loan must be paid off when selling the house. The sale proceeds can be used to settle the balance, but if your home’s sale price is not enough to cover the amount owed, you’ll be responsible for paying off the remainder. It’s important to remember that these loans, like other home financing, are typically tied to the homeowner’s financial responsibility and are not automatically transferred to new owners¹.
Can I Transfer My Solar Loan to the New Buyer?
A common question we get from customers is whether we can transfer a solar loan to a new homeowner. In some cases, it may be possible to transfer the loan, but it’s not as simple as passing on the payment obligations. Solar lenders may allow the loan to be transferred, but this requires approval from the loan provider. The new homeowner must qualify for the loan, typically through a credit check².
Not all homebuyers are willing to assume an existing financing arrangement, even if they are attracted to a house with solar panels. This can complicate the buyer’s financing process and make it more difficult for the seller. If the loan terms are favorable, the buyer may be more open to assuming it. However, buyers should feel comfortable with the loan’s interest rate, remaining balance, and other terms the lender sets. The loan transfer process may involve additional paperwork and coordination with the lender and the solar company³.
In many cases, a potential buyer may prefer to have the loan settled before taking ownership of the house. This is especially true if the homebuyer is unfamiliar with solar energy or isn’t interested in inheriting the loan as part of the home purchase⁴.
What If the Buyer Refuses to Take on the Loan?
If the buyer is not interested in assuming the solar loan, the seller must settle the loan before closing the sale. This requires careful planning. If the amount owed on the solar loan exceeds the home’s value, the homeowner may need to pay the difference out of pocket⁵.
One way to address this is by selling the house for a higher price to cover the cost of the solar loan. However, this can be difficult in a competitive housing market, where buyers may not be willing to pay extra for a solar system, especially if they aren’t interested in taking on the loan⁶.
Alternatives to Transferring the Solar Loan
If transferring the solar loan doesn’t seem feasible, there are several alternatives to consider:
- Pay Off the Loan Before Moving:
One of the simplest solutions is to pay off the solar loan before selling your home. This allows you to sell the property without the encumbrance of the loan, making it more appealing to potential buyers⁷. Additionally, if you have the funds, paying off the loan early may help you avoid interest charges, depending on the loan terms⁸. - Refinance the Loan:
Refinancing the solar loan before selling your home is another option. Some lenders view solar systems as upgrades that increase the property’s value, which may qualify you for better refinancing terms. Refinancing into a larger home mortgage could allow you to pay off the solar loan in full, streamlining the sale process and making it easier to transition to your new home⁸. - Sell the Solar System Separately:
In certain cases, the solar system can be sold to a third party or another buyer interested in taking on the system and its loan. However, this is typically not an option if the solar loan is part of the mortgage, as it generally must be paid off before the sale. If you own the system outright, it can be included in the property value and sold with the home without complications.
Making the Right Move with Your Solar Loan
Whether a solar loan can be transferred when you move is essential for homeowners exploring solar installation. While solar loans are generally not transferable, there are viable options to address this challenge, such as paying off the loan before selling or refinancing to simplify the process.
At Advanced Energy Systems, we aim to empower you with the knowledge you need to make informed decisions about your solar investment. Whether you plan to stay in your home long-term or are still determining your plans, understanding the financial implications of solar financing is key. By carefully evaluating your options, you can ensure that your solar investment aligns with your long-term goals.
If you have questions about financing options or want to learn more about how solar energy can benefit you, don’t hesitate to contact us. We’re here to guide you every step of the way.
References
- Southern Energy. (n.d.). Buying and selling a home with solar. Retrieved from https://southern-energy.com/buying-selling-a-home-with-solar/
- Solar Reviews. (n.d.). Buying a house with solar panels. Retrieved from https://www.solarreviews.com/blog/buying-a-house-with-solar-panels
- Bankrate. (n.d.). What to know before buying a house with solar panels. Retrieved from https://www.bankrate.com/real-estate/buying-house-with-solar-panels/
- EnergySage. (n.d.). Solar for first-time homebuyers: Investment and savings. Retrieved from https://www.energysage.com/solar/first-time-homebuyer-solar-investment/
- Boston Solar. (n.d.). What happens when you sell or buy a home with solar panels. Retrieved from https://www.bostonsolar.us/solar-blog-resource-center/blog/what-happens-when-you-sell-or-buy-a-home-with-solar-panels
- Freedom Solar Power. (n.d.). Can I refinance my house with solar panels? Retrieved from https://freedomsolarpower.com/blog/can-i-refinance-my-house-with-solar-panels-2#:~:text=The%20technology%20that%20converts%20sunlight,of%20that%20higher%20home%20equity!
- Quicken Loans. (n.d.). Selling a house with solar panels. Retrieved from https://www.quickenloans.com/learn/selling-house-with-solar-panels
- Palmetto. (n.d.). Guide to selling a house with solar panels. Retrieved from https://palmetto.com/solar/selling-a-house-with-solar-panels-guide
