Warm Homes Loan: what it means for heat pump and solar costs
GOV.UK has launched government-backed no- and low-interest loans for heat pumps, solar and batteries. Here is how they sit against our cost figures.
Households across the UK can now borrow for a heat pump, solar panels or a battery at reduced interest rates, and some loans are interest free. The loans don't make the work cheaper. They spread the cost, so what matters is the total you repay and the quote you take it against.
What has been announced
According to GOV.UK, the new Warm Homes Loan Scheme offers government-backed no- and low-interest loans for clean energy technology such as heat pumps, batteries and solar panels. The aim is to let people install the equipment without paying upfront, repaying over many years instead.
The main points from the announcement:
- UK-wide. The loans are open to households in England, Scotland, Wales and Northern Ireland.
- Lower rates. The government says it has worked with lenders to cut interest by up to 5 percentage points compared with regular bank or high street loans.
- Worked example. GOV.UK says a homeowner borrowing £10,000 at 8% over seven years could expect to repay around £155 a month on a loan available now. Through the scheme they could save up to £285 a year on repayments.
- Ten lenders at launch. Some loans are interest free, and in some cases you get up to thirty years to repay. More lenders and products are expected to join.
- MCS installers. Apart from heat network connections, work is carried out by MCS-certified installers.
- Grants can be combined. The Boiler Upgrade Scheme, and Home Energy Scotland in Scotland, can be used alongside a loan.
- Bill savings. According to GOV.UK, a heat pump, battery and solar panels together could save a family up to £550 a year on energy bills. A time-of-use tariff could add a further £300 a year.
The page also says demand is rising. It reports almost 150,000 solar installations in the first six months of this year, and record heat pump sales in 2025.
GOV.UK says lenders run their own affordability, credit and eligibility checks. Some lenders partner only with specific installers, while others let you pick any MCS-certified firm.
What it means for heat pump costs
A loan changes how you pay, not the price of the job. For an air source heat pump, we put the typical mid-range cost at £12,900, with most quotes falling in £10,000 – £16,700. Our figures come from labour hours × local rates plus materials. We check them against market prices and real quotes. The full breakdown is in our Air source heat pump guide.
The Boiler Upgrade Scheme still takes £7,500 off an air source or ground source heat pump in England and Wales, and the installer must be MCS certified. In Scotland, Home Energy Scotland offers a grant of up to £7,500 plus an optional £7,500 interest-free loan. Installing energy-saving materials such as heat pumps, insulation, solar panels and batteries is also 0% VAT until 31 March 2027. Our figures include 20% VAT except where 0% applies.
If you combine the grant with a loan, you only need to borrow what is left after the grant. The two are separate schemes, so check how your chosen lender treats the grant before you sign.
What it means for solar and battery costs
For a typical 6 kWp solar array, we put the mid-range cost at £12,500, with a usual range of £9,800 – £16,300. Adding storage changes the total. A 5 kWh battery brings a typical mid-range system to £12,500, and a 10 kWh battery to £15,600.
| Material | Typical | Usual range | Lifespan |
|---|---|---|---|
| No battery | £9,500 | £7,400 – £12,300 | – |
| 5 kWh battery | £12,500 | £9,800 – £16,300 | – |
| 10 kWh battery | £15,600 | £12,200 – £20,300 | – |
| 13.5 kWh battery | £17,800 | £13,800 – £23,100 | – |
Our Solar panels guide explains what drives those differences.
Batteries and panels are often sold as a package, and a loan can be attached to the package. Ask for the panels, battery, installation and any monitoring or system-care add-ons as separate lines, so you can see what the finance is paying for.
How to judge a loan offer
A low monthly payment can hide a high total cost. Before you accept:
- Compare the total repayable, not just the monthly figure. A longer term lowers the payment but usually adds interest, unless the loan is interest free.
- Check fees. GOV.UK specifically advises looking at monthly fees alongside the term.
- Get several quotes first. Compare at least three MCS-certified quotes before you choose a lender. Where a lender only works with its own installers, you have less room to shop around.
- Keep your paperwork. GOV.UK advises keeping the quote, finance agreement, invoice, proof of purchase and MCS certificate.
- Look at your tariff. GOV.UK suggests checking whether a smart energy tariff could increase your savings.
The savings GOV.UK quotes are upper limits ("up to"), and your own bills depend on your home, your usage and your tariff. Treat them as a ceiling when you work out whether a repayment pays for itself.
Bigger picture
The loans sit alongside the Warm Homes Plan published in January 2026. It commits £15bn to 2030, including grants for low-income households and low- or zero-interest loans being phased in. The loan scheme is the first part of that offer, so expect the details to change as more lenders join.
Check your quote
If you already have a quote that includes finance, put the installation price through our "is my quote fair" tool before agreeing. A cheap loan on an inflated price doesn't save you money, and the tool checks the price of the work separately from the finance. If you're still weighing up the work, start with our guides to Air source heat pump and Solar panels.