A new government Warm Homes Loan scheme launched today will offer households savings of up to £850 a year under Andy Burnham's government. The scheme, introduced by the Department for Energy Security and Net Zero (DESNZ), will allow households to save money on their energy bills by installing renewables like heat pumps, batteries and solar panels using 0% and low-interest loans with no upfront cost.
How the scheme works
The DESNZ says installing a heat pump, battery and solar panels could help families save up to £550 a year on their energy bills, rising by a further £300 a year with a time-of-use tariff. The department stated: "The government has worked with lenders to deliver an up-to-5 per cent reduction in interest rates from regular loans offered by banks or high street lenders."
It added: "For example, a homeowner borrowing £10,000, at 8%, over seven years could expect to repay around £155 a month with a loan available right now. Through the loan scheme, they could save up to £285 a year on repayments."
Loan amounts and grants
Homeowners will also be able to combine a loan with a grant of up to £9,000 through the government's Boiler Upgrade Scheme (and Home Energy Scotland in Scotland), further reducing the cost of installing a heat pump. The maximum size of loan supported for each available technology is:
- Solar panels – up to £15,000
- Electrical storage battery – up to £15,000
- Air-water source heat pump – up to £20,000
- Air-air source heat pump – up to £10,000 (when MCS certification available)
- Ground source heat pump – up to £35,000
- Biomass boiler – up to £20,000
- Heat network connection – up to £7,500
- Micro-renewable system – up to £20,000
Reactions from lenders
Energy Secretary Miatta Fahnbulleh said: "Energy is an everyday essential that must be affordable for everyone. These government-supported loans will help families across the UK upgrade their homes with no upfront costs to make them warmer and cheaper to run."
Ciara Davies, Chief Executive of The Money Co-op, said: "The Money Co-op is proud to be one of the first lenders to participate in the Warm Homes Loan Scheme. As a not-for-profit co-operative, we believe access to affordable finance can play an important role in helping people make their homes warmer, more energy-efficient and more affordable to run. Taking part in this scheme is a natural fit with our credit union values of putting our members and communities first, while supporting a fairer, more sustainable future."
Andrew Asaam, Managing Director, Consumer Credit, Lloyds Banking Group, said: "We know the difference having a home that's warm and affordable to run can make. But finding the money upfront for energy-saving improvements can be a real challenge. We want to help customers make those changes in a way they can afford, so they can spend less on energy and feel more comfortable at home. We're looking forward to working with government on the Warm Homes Loan Scheme and seeing the difference it will make."
