Warm Homes Loan scheme: who can apply and how much you can borrow
What is the Warm Homes Loan scheme?
The Warm Homes Loan scheme is a government-backed no-interest or low-interest loan provided by a bank or lender that households in England, Scotland, Wales and Northern Ireland can apply for in order to pay for upgrades like heat pumps, solar panels and storage batteries.
You apply directly to the lender, which will offer either no interest rates or interest rates reduced by up to five per cent.
For example: if you borrowed £10,000 over seven years, you would repay around £155 a month with an 8% loan available right now. With a 3% loan, the monthly repayment would be around £132. With no interest applied, it would be around £119.
After the work is completed, homeowners may be selected for an audit on behalf of the Department for Energy Security and Net Zero (DESNZ) or a quality check by the Microgeneration Certification Scheme (MCS).
Who is eligible for the Warm Homes Loan scheme?
Individual lenders may have specific eligibility requirements, but broadly, in order to qualify for a Warm Homes Loan, you simply need to own the UK-based residential property you’re applying to upgrade, with or without a mortgage. Each lender will run its own credit checks to make the final decision on your loan.
What can I use the Warm Homes Loan to get?
You must use the loan to pay for one (or more) of the following upgrades.
| Upgrade | Maximum loan |
|---|---|
| Air-to-air heat pump (only covered once MCS certification for them is available) | £10,000 |
| Air-to-water heat pump | £20,000 |
| Ground source heat pump | £35,000 |
| Solar panels (solar PV) | £15,000 |
| Battery storage | £15,000 |
| Heat network connection | £7,500 |
| Biomass boiler | £20,000 |
| Micro-renewable system (including domestic wind turbines and micro hydro) | £20,000 |
You can also combine a loan with a grant of up to £9,000 through the government’s Boiler Upgrade Scheme (and Home Energy Scotland in Scotland).
Who installs the new systems?
You can’t do the work yourself. Instead, you should get a Microgeneration Certification Scheme (MCS) certified installer to do the improvement work, but you can get any installer to install heat network connections.
Which lenders are offering Warm Homes Loans?
You can get a Warm Homes Loan from the following lenders:
- HomeServe Finance (partnering with E.ON Next)
- Hometree Finance
- The Money Co-Op
- Propensio
- Secure Trust Bank
- Selina Finance
- South Manchester Credit Union
- Sunsave Energy
- Tandem Bank (partnering with British Gas)
- This Bank
What should I consider before applying for a Warm Homes Loan?
Like any financial decision, a Warm Homes Loan shouldn’t be entered into lightly. Think about:
- What kind of system or upgrade would work best for your home - for instance, solar panels wouldn’t be suitable if you live in a flat, but a biomass boiler might be
- How much the work will cost - get quotes to compare against each other
- How much you have to repay and how long you’ll have to pay it back.
How much can I save on my bills by installing an energy upgrade?
The amount you can save will always depend on various factors, including the size of your home, how much energy you use and which of these systems you opt for. However, the government says that installing a heat pump along with solar panels and a storage battery could help households save up to £550 a year. Combined with a time-of-use tariff, these savings could reach £850.
FAQs
Can landlords and leaseholders apply?
The official eligibility guidelines don’t mention landlords or leaseholders specifically. It's best to check with the lender before you apply.
