With energy bills still taking a sizable chunk out of your household budget, making your home cheaper to heat and power sounds appealing. But installing solar panels, a heat pump or home battery can cost thousands of pounds, putting these improvements out of reach for many households.
Now, a new government backed loan scheme could make them more affordable. Launched on 27 October 2026, the Warm Homes Loan Scheme offers interest-free and low-interest loans to help you pay for energy-saving improvements without a large upfront payment. The government says installing a heat pump, solar panels and battery storage together could save you up to £550 a year on energy bills, with a further £300 possible if you use a suitable time-of-use energy tariff.
So how does the scheme work, who qualifies and could it actually save you money?
What is the Warm Homes Loan Scheme?
The scheme helps you spread the cost of making your home more energy efficient, rather than paying for everything upfront. You can borrow money through participating lenders at reduced interest rates, with some offering interest-free finance. Depending on the lender, you could have up to 30 years to repay. The government says it has worked with lenders to reduce interest rates by up to five percentage points compared with standard loans.
For example, if you borrowed £10,000 over seven years at 8% interest, you’d typically repay around £155 a month. Under the new scheme, the government estimates you could save up to £285 a year on repayments.
But remember, this is a loan, not a grant. You’ll still need to repay what you borrow, and the total cost will depend on your lender’s terms.
What home improvements can you pay for?
You can use the scheme to fund a range of energy saving technologies, including solar panels, battery storage and heat pumps.
The maximum supported loan amounts include:
- Solar panels: up to £15,000
- Home battery storage: up to £15,000
- Air-to-water heat pumps: up to £20,000
- Ground source heat pumps: up to £35,000
- Heat network connections: up to £7,500
Other eligible technologies include certain air-to-air heat pumps, biomass boilers and small-scale renewable energy systems.
You can also apply for a loan covering more than one improvement, subject to the lender’s eligibility and affordability checks.
Who can apply?
You can apply if you own a residential property in England, Scotland, Wales or Northern Ireland, whether you have a mortgage or own your home outright. You’ll need to meet the lender’s credit and affordability requirements, and your proposed improvements must qualify under the scheme.
If you’re renting, you can’t apply for a loan to improve a property you don’t own. However, your landlord may be able to use the scheme to fund improvements.
You can check the full requirements on the government’s Warm Homes Loan Scheme eligibility page.
Could you get a grant instead?
Before taking out a loan, check whether you’re entitled to financial support that you won’t need to repay. If you’re on a lower income, you may qualify for free energy saving improvements through the Warm Homes: Local Grant or other support schemes.
You may also be able to combine a Warm Homes loan with a grant of up to £9,000 through the government’s Boiler Upgrade Scheme, or access support through Home Energy Scotland.
You can’t use a loan and another government funding scheme to pay for the same improvement, but you may be able to combine different sources of funding towards a larger project.
Check the Boiler Upgrade Scheme and the government’s Warm Homes Loan Scheme guidance before committing to any borrowing.
Will you really save £850 a year?
The government’s headline savings figure is certainly attractive, but it isn’t guaranteed.
The estimate assumes you install a combination of solar panels, battery storage and a heat pump, with additional savings possible through a suitable time-of-use tariff. Your actual savings will depend on your property’s size, insulation, energy consumption, existing heating system and the tariff you choose.
And, lower energy bills don’t necessarily mean lower overall household costs.
For example, saving £550 a year on energy bills sounds good, but if your loan repayments cost £1,200 a year, your household spending could still increase while you’re repaying the loan.
That doesn’t necessarily make the improvements a bad investment. You may benefit from lower bills over many years, greater energy efficiency and improvements to your property.
But it’s worth calculating the total cost before signing up, rather than focusing only on the potential savings.
How do you apply?
Ten lenders are initially taking part in the scheme, including HomeServe, Secure Trust Bank, Selina Finance, Sunsave, Tandem Bank and several credit unions and specialist finance providers.
Some lenders work with particular installers, while others allow you to choose your own approved installer.
To get started:
- Check which improvements suit your home. Use the government’s energy-saving advice to explore your options.
- Compare quotes and finance deals. Look at interest rates, monthly repayments, fees and the total amount you’ll repay.
- Check for grants. You could reduce the amount you need to borrow.
- Apply through a participating lender or installer. You’ll need to pass the lender’s eligibility, credit and affordability checks.
You can find more information and the participating lenders through the official scheme factsheet.
What should you watch out for?
Before agreeing to any home improvement work, check exactly what you’re paying for and what protection you’ll have if something goes wrong. Most installations funded through the scheme must be completed by an installer certified under the Microgeneration Certification Scheme (MCS), which sets recognised technical and consumer protection standards.
Check that your installer is properly certified, get a detailed written quote and make sure you understand the guarantees and warranties. Be particularly careful about high-pressure sales tactics or promises that your energy bills will disappear completely. No installer can guarantee how much you’ll save without properly assessing your property and energy use.
Keep copies of your finance agreement, installation quote, invoices, guarantees and MCS certificate.
What if something goes wrong?
If your installation is faulty, delayed or doesn’t match what you were promised, contact the installer and explain what you want them to put right. If you financed the work through a loan, you may also have rights against the lender, depending on the type of agreement and how the purchase was arranged.
For qualifying purchases, Section 75 of the Consumer Credit Act can make a credit provider jointly responsible for certain breaches of contract or misrepresentations.
You can also complain through the relevant MCS consumer protection arrangements or escalate an unresolved financial services complaint to the Financial Ombudsman Service, where eligible.
Resolver can help you understand your rights, organise your evidence and raise complaints with participating companies.
Is the Warm Homes Loan Scheme worth considering?
If you’ve been thinking about installing solar panels, a heat pump or battery storage but have been put off by the upfront cost, the new scheme could make those improvements more affordable. Lower-interest finance and access to existing grants could make a significant difference, particularly if you’re planning to stay in your home long enough to benefit from lower running costs.
But don’t assume a government backed loan is automatically the cheapest option. Compare lenders, check for grants and work out whether the likely savings justify the repayments. The aim is to reduce your household costs, not take on borrowing that leaves you struggling to pay your bills.
And if you’re having problems with an energy supplier, finance provider or home improvement company, you can use Resolver to understand your rights and manage your complaint.
If you have any thoughts on this topic, or any other consumer issues you would like us to cover, feel free to get in touch with us at support@resolver.co.uk