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- The UK Government has fired up a new 'Warm Homes Loan Scheme'
- It offers interest-free or low interest loans of up to £15,000 for solar or a battery, £20,000 for heat pumps or other renewable heating tech
- The cheap loans will benefit from an up-to-5% reduction in interest rates compared to regular loans, with up to 30 years to repay
The UK Government has announced a new 'Warm Homes Loan Scheme' designed to provide either interest-free or low interest loans for homeowners buying solar panels, a battery, or a heat pump (and other renewables besides).
The Guardian reports that energy suppliers such as British Gas and E.On have partnered with lenders (including Homeserve, Tandem Bank and The Money Co-op) to offer the loans.
Those wanting solar panels or a storage battery can get a loan of up to £15,000 (so up to £30,000 for a full system with both). An air-to-water heat pump (meaning one that uses your existing central heating radiators) qualifies for a loan of up to £20,000. Air-to-air heat pump loans go up to £10,000, and a loan for a ground-source heat pump runs up to £35,000.
Only some of these loans will be interest-free, but where interest is charged it'll be at a low level, the Government it has worked with lenders to deliver an "up-to-5% reduction in interest rates from regular loans offered by banks or high street lenders".
The Government also notes that the loan periods can be up to 30 years in some cases, and that "people can shop around for the one that works best".
As well as a loan, some homeowners will still be able to benefit from a grant for a heat pump of up to £9,000 under the current 'Boiler Upgrade Scheme' or BUS (for upgrading away from a fossil fuel heating system). There could be a catch here, though, which I'll come back to shortly.
The Government said: "We know demand for these technologies is soaring, with almost 150,000 solar panel installations in first six months of this year. Heat pump sales also reached a record high in 2025. Our loans will help thousands more households cut their energy bills quickly."
All loan-funded installations will use MCS-certified installers.
Analysis: new loans are welcome — but BUS grants are reportedly changing too
Any financial support for making the move to renewable energy is very welcome for obvious reasons. These systems can be very pricey, as I've found out first-hand — I recently had a solar panel and battery setup installed. If you want a sizeable array and a battery with a higher capacity, that doesn't come cheap, so a loan really helps — and the repayments are subsidized by the savings made on your electricity bill.
I live in Scotland, where I couldn't get a loan of this nature before now, and it's worth noting that this scheme is for the whole of the UK, so those in England, Scotland, Wales and Northern Ireland can benefit.
What we don't know yet is how many of the loans will be interest-free, as obviously that's the ideal proposition — presumably those will be the shorter-term financing arrangements.
For the low-interest loans, the Government gives an example of a homeowner borrowing £10,000 at 8% over seven years, where the expected repayment would be about £155 per month. With the new loan scheme, we're told they'd save "up to £285 a year on repayments", so they'd be repaying more like £130 per month.
The Government estimates that installing a heat pump, solar panels and battery could help a household save up to £550 per year on energy bills — and with solar export (which is plentiful in the summer), £300 more can be saved. I'd say those figures were right based on my experience (with just solar and battery), and this money offsets the cost of the loan as already noted.
What about the potential catch for the 'Boiler Upgrade Scheme' grant that I mentioned? Apparently in today's budget, chancellor John Healey is reportedly going to scale back these heat pump grants, with hundreds of millions of pounds of potential funding to be cut from its £2.7 billion five-year budget.
Currently a grant typically provides £7,500 towards the cost of a heat pump, but it's viewed dimly as a subsidy mostly used by middle-class homes. The Guardian tells us that the Government is likely to switch to offer the mentioned up to £9,000 grants, but crucially these are supposedly going to be for households in remote areas not connected to the gas network. The idea will be to help those homes transition from very expensive oil heating systems to a heat pump.
Meanwhile, for those not looking at a larger investment in renewables, whether loan-funded or not, plug-in solar remains a fresh and much more affordable option than a full solar install.
