Warm Homes Loan: borrowing for heat pumps, solar panels and batteries

What the scheme offers

The Warm Homes Loan Scheme offers government-backed no- and low-interest loans to install clean energy technology such as heat pumps, solar panels and home batteries, with no upfront cost. Repayments are spread over several years, up to 30 years with some lenders. The loans are available in England, Scotland, Wales and Northern Ireland.

The government says it has worked with lenders to cut interest rates by up to 5 percentage points compared with ordinary loans, and some loans are interest free. Ten lenders are taking part at launch: Homeserve (with E.ON), Hometree Finance, Propensio, Secure Trust Bank, Selina Finance, South Manchester Credit Union, Sunsave, Tandem Bank, The Money Co-op and This Bank. More are expected to join.

How much you can borrow

The largest loan supported for each technology is: solar panels up to £15,000; a home battery up to £15,000; an air-to-water heat pump up to £20,000; an air-to-air heat pump up to £10,000 (once certification is available); a ground source heat pump up to £35,000; a biomass boiler up to £20,000; a heat network connection up to £7,500; and other micro-renewable systems up to £20,000.

Everything except heat network connections must be installed by an MCS-certified installer, which means recognised technical and consumer-protection standards apply.

Combining a loan with a grant

Homeowners can combine a loan with a grant of up to £9,000 through the Boiler Upgrade Scheme, or Home Energy Scotland in Scotland, to bring down the cost of a heat pump. If you are on a lower income, check whether you qualify for other grants before you borrow.

What it could save, and what decides it

The government says a heat pump, battery and solar panels together could save a household up to £550 a year on energy bills, and a further £300 a year with a time-of-use tariff. These are its estimates for a combined installation; your saving depends on your home, how you use energy and your tariff.

One reason results vary: under the current price cap, electricity costs 26.32p per kWh against 7.97p for gas, about 3.3 times as much. A heat pump replacing a gas boiler saves money only if it turns each kWh of electricity into enough heat to beat that price gap. Electricity and gas prices by region.

On repayments, the government gives the example of a £10,000 loan at 8% over seven years, about £155 a month on an ordinary loan today. Through the scheme, it says the same borrower could save up to £285 a year in repayments.

Before you apply

GOV.UK suggests these steps: work out which upgrades suit your home, using its free advice service; check for grants; get installation quotes and compare loans on the total amount repayable, the length of the loan and any fees; then apply to a participating lender or installer, who will run normal affordability and credit checks.

Some lenders work only with particular installers, while others let you choose any MCS-certified installer. If your application succeeds, keep the quote, finance agreement, invoice, proof of purchase and MCS certificate. Afterwards, check whether a smart or time-of-use tariff would increase your savings.

Frequently asked questions