# The Warm Homes Loan Scheme

From 27 October 2026 you can borrow at low or no interest to pay for a heat pump, solar panels and other clean energy upgrades, with nothing to pay upfront. The article explains what you can borrow, how the loans compare with ordinary credit and what to check before you apply.

- Kind: Article
- Level: Beginner
- Category: Paperwork and permissions
- Updated: 2026-11-01
- Canonical address: https://ampworth.com/articles/warm-homes-loan-scheme

> **In short:** It is a government-backed loan for clean energy upgrades, available across the UK through ten lenders. You pay nothing upfront, rates are up to 5 percentage points below an ordinary loan, some loans are interest-free, and you can borrow up to £35,000 depending on the technology. It is still a loan, with normal credit checks, so compare the total you repay, not only the monthly payment.

On 27 October 2026 the government published the terms of the Warm Homes Loan Scheme. It offers low-interest and interest-free loans for heat pumps, solar panels, batteries and other clean energy technology. You pay nothing upfront and spread the cost over several years.

Cost has always been the hardest part of these upgrades. A heat pump or a roof of solar panels costs thousands of pounds before it saves anything. Grants have reduced the bill but have rarely covered it, so many households have needed savings, an ordinary loan or a remortgage to make up the difference. The scheme is aimed at that gap.

## Scheme basics

The government does not lend the money itself. Lenders taking part in the scheme offer the loans at rates up to 5 percentage points lower than a comparable bank or high-street loan. Some loans are interest-free, and repayment terms can run for up to 30 years.

The scheme is open to households in England, Scotland, Wales and Northern Ireland. That makes it wider than the Boiler Upgrade Scheme, which covers England and Wales only.

Each lender assesses applications with its normal affordability, credit and eligibility checks. Government backing lowers the interest rate, but it does not guarantee that you are approved, and it does not change the fact that you are taking on a debt.

## Loan limits

The most you can borrow depends on what you install.

| What is installed | Maximum loan |
| --- | --- |
| Solar panels | £15,000 |
| Battery storage | £15,000 |
| Air source heat pump (air to water) | £20,000 |
| Air source heat pump (air to air) | £10,000 |
| Ground source heat pump | £35,000 |
| Biomass boiler | £20,000 |
| Heat network connection | £7,500 |
| Other micro-renewable system | £20,000 |

Air-to-air heat pumps qualify only after Microgeneration Certification Scheme (MCS) certification becomes available for them. These units blow warm air into a room and do not heat water, so they suit a different kind of home from an air-to-water system with radiators.

The limits are generous for a typical installation, but a large ground source system with boreholes can cost more than £35,000. If your quotation is above the limit for that technology, you need to pay the difference from somewhere else.

## Repayment costs

The factsheet gives an example: a £10,000 loan at 8% over seven years costs about £155 a month. A loan 5 percentage points cheaper saves up to £285 a year on repayments.

The following table works that example through over the full seven years. The figures are rounded, and a real loan might also carry fees.

| £10,000 over seven years | Monthly payment | Total repaid | Interest paid |
| --- | --- | --- | --- |
| Ordinary loan at 8% | £156 | £13,100 | £3,100 |
| Scheme loan at 3% | £132 | £11,100 | £1,100 |
| Interest-free scheme loan | £119 | £10,000 | £0 |

Over seven years the 3% loan saves about £2,000 in interest compared with the ordinary one. The interest-free loan saves all of it.

Long terms need more care. Spreading a loan over 20 or 30 years makes the monthly payment small, but unless the loan is interest-free, you pay interest for every one of those years. A low rate over a long term can cost more in total than a higher rate over a short one. A long term can also outlast parts of the equipment: an inverter or a battery might need replacing while you are still paying for the original. Compare loans on the total amount repayable, and choose the shortest term you can comfortably afford.

## Bill savings

The government says that a heat pump, a battery and solar panels together could save a household up to £550 a year, and a further £300 a year with a time-of-use tariff. A time-of-use tariff charges less for electricity used outside peak hours, which suits a battery that charges overnight and a heat pump that can run when power is cheap.

Treat those figures as a ceiling, not an estimate for your home. Your savings depend on how well your home is insulated, what you heat it with now, how much of your solar output you use yourself and the tariffs you pay. The calculators linked from this article give a figure for your own home, and an MCS installer's survey gives a better one.

The useful comparison is your expected yearly saving against your yearly repayment. If the saving covers the repayment, the upgrade pays for itself from the start. If it does not, you are paying something each year for a warmer home and a lower carbon footprint, which can still be worth doing, but it is better to know that before you sign.

## Grants and loans together

You can combine a loan with a grant. In England and Wales, the Boiler Upgrade Scheme pays up to £9,000 towards a heat pump, and the installer deducts it from the price. In Scotland, Home Energy Scotland offers its own grants and loans. The loan then covers some or all of what remains.

Grant amounts and eligibility change from time to time. Check the current grant before you work out how much to borrow, because a smaller grant means a larger loan. The [Boiler Upgrade Scheme guide](https://ampworth.com/guides/the-boiler-upgrade-scheme) explains who qualifies and how the grant is claimed.

If you are on a lower income, check whether you qualify for a grant that pays for the whole upgrade before you borrow anything.

## Installer requirements

Every installation funded by the scheme, except a heat network connection, must be carried out by an MCS-certified installer. That gives you the protections of the [MCS Customer Commitment](https://ampworth.com/articles/the-mcs-customer-commitment): a survey in person, performance estimates made by the MCS methods, a written contract and a complaints route if something goes wrong.

Some lenders work only with particular installers, and some installers offer the loan themselves. That can make applying simpler, but it also means the loan and the quotation arrive together. Get at least one other quotation from an installer you found independently, so that you can judge the price on its own merits. You can find certified installers on the [MCS website](https://mcscertified.com/find-an-installer/).

## Participating lenders

The scheme started with ten lenders:

- Homeserve (with E.ON)
- Hometree Finance
- Propensio
- Secure Trust Bank
- Selina Finance
- South Manchester Credit Union
- Sunsave
- Tandem Bank
- The Money Co-op
- This Bank

The government expects more lenders and loan products to join later. Terms differ between lenders, so compare several.

## Application steps

The factsheet sets out the steps in order:

1. Decide which upgrades suit your home. The free advice on GOV.UK and the calculators on this site are a starting point.
2. Check whether you qualify for a grant, particularly if you are on a lower income.
3. Compare quotations and loans. For each loan, look at the total amount repayable, the length of the term and any monthly fees.
4. Apply through a participating lender, or through an installer that offers the loan.
5. If you are approved, keep the quotation, the finance agreement, the invoice, proof of purchase and the MCS certificate.
6. Consider switching to a smart or time-of-use tariff to get the most from the upgrade.

Keep the records from step 5 with the rest of the installation paperwork. A lender or a buyer of your home might ask for them, and the MCS certificate matters for any export payment and for the warranty. The article on [what you should receive](https://ampworth.com/articles/what-you-should-receive) lists the full set of documents.

## Key points

The scheme makes clean energy upgrades possible for households that could not pay upfront, at a lower cost of borrowing than an ordinary loan. It does not make every upgrade worthwhile, and a loan with a long term or monthly fees can cost more than it first appears.

Before you sign, make sure you have three things: a quotation from an MCS installer based on a survey of your home, an estimate of what the upgrade saves you each year, and the total amount you will repay. If the saving and the repayment are close, the loan is doing its job.

## Work it out

- [What size heat pump do I need?](https://ampworth.com/calculators/heat-pump-size): Estimates a house's heat loss and the heat pump that covers it, from a year of gas or oil bills, and says whether a quoted size looks plausible.
- [What size solar system do I need?](https://ampworth.com/calculators/solar-pv-system-size): Works out the array a home needs — capacity, panels, battery and what it saves — from a postcode, a roof direction and a year of electricity use.
- [Heat pump running cost](https://ampworth.com/calculators/heat-pump-running-cost): Compares a year of heating on the current fuel with the same heat from a heat pump.

## Sources

- MCS 001-1, Scheme requirements for contractors: https://mcscertified.com/standards-library/
- Installer Operating Requirements, What an MCS contractor agrees to: https://mcscertified.com/standards-library/
- MCS Customer Commitment, The commitment made to customers: https://mcscertified.com/standards-library/

## Related

- [The Boiler Upgrade Scheme](https://ampworth.com/guides/the-boiler-upgrade-scheme.md): The grant that pays part of the cost of replacing a boiler with a heat pump in England and Wales. What it is worth, who can have it, and what the April 2026 rule changes opened up.
- [What a quotation should contain](https://ampworth.com/articles/reading-a-quotation.md): The MCS standards fix the method behind the numbers, so a quotation that follows them has certain things in it. What to look for, and what it usually means when one of them is missing.
- [The MCS Customer Commitment](https://ampworth.com/articles/the-mcs-customer-commitment.md): MCS publishes a short document setting out what a certified contractor undertakes to do for its customers. It is worth reading before signing anything, because it describes what you are entitled to expect.
- [What an MCS installation should leave behind](https://ampworth.com/articles/what-you-should-receive.md): The paperwork is not a formality. The certificate, the design calculations and the commissioning records are what prove the installation was done to the standard, and they are needed years later.