Zero-interest loans for heat pumps and solar panels 'weeks away

A government-backed loan scheme offering interest rates as low as zero per cent on heat pumps, solar panels and home batteries is due to launch within weeks, according to The i Paper. Under the plan, the Treasury would pay participating lenders up to 20% of the loan amount, letting them cut interest rates by up to five percentage points — so a lender currently charging 7% on a solar loan could offer it at 2% instead. The loans would run for a minimum of three years, and the paper reports that high street banks and buy-now-pay-later lenders are expected to be among the participants, though the final list has not been confirmed.

One important gap: the scheme would not cover insulation, which is normally recommended alongside a heat pump to help it run efficiently. The i Paper also reports rumours that the Government is considering cuts to the Boiler Upgrade Scheme as the Department for Energy Security and Net Zero looks for £2bn of savings to help fund higher defence spending. Citizens Advice told the paper the loan scheme risks leaving behind a "squeezed middle" — households who earn too much for means-tested grant support but don't have spare income to take on debt.

None of this is confirmed government policy yet; a DESNZ spokesperson said only that more details on the "Warm Homes Loan Scheme" would be provided shortly, and the report suggests a launch is expected after this month's Budget.

What's still certain, for now

The headline grant for heat pumps hasn't changed. The Boiler Upgrade Scheme currently offers £7,500 off an air source or ground source heat pump in England and Wales, as long as the installer is MCS certified. In Scotland, the Home Energy Scotland grant offers up to £7,500, plus an optional £7,500 interest-free loan on top. Separately, 0% VAT applies to installing heat pumps, solar panels, batteries and insulation until 31 March 2027 — that's worth having in mind whatever happens to the loan scheme, since it already strips 20% off the bill. The wider Warm Homes Plan, published in January 2026, sets out £15bn of funding to 2030 for grants to low-income households and loans that are being phased in gradually — the scheme reported above would sit within that programme.

What a cheap loan would mean for a heat pump

A typical 8kW air source heat pump costs £12,900 (range £10,000 – £16,700) once you include installation — our figures already include VAT, which for a heat pump means 0% under the current relief. If the Boiler Upgrade Scheme stays at £7,500 and a near-zero-interest loan covers the rest, the gap between "can't afford it" and "can afford it this winter" narrows considerably compared with borrowing at a typical personal loan rate of around 5.9% APR. But if the grant is cut, as the report suggests is under discussion, a cheap loan would only replace some of that support, not add to it. We'd treat any number for a reduced or removed Boiler Upgrade Scheme as rumour until DESNZ confirms it. See our Air source heat pump guide for how we build that estimate from labour hours, local installer rates and materials, checked against real quotes.

Solar and batteries

Solar panels and batteries are the other two technologies named in the report. A 6kWp solar system typically costs £12,500, and adding a 10kWh battery brings in another £15,600 at mid-range pricing on top of the panels — see Solar panels for the full breakdown. Both already qualify for 0% VAT until March 2027, so a low-interest loan on top would mainly help spread the upfront cost over a few years rather than cut the price itself.

What to do while this is unconfirmed

If you're already weighing up a quote for a heat pump, boiler or solar installation, don't delay a decision purely on the promise of a loan scheme that hasn't launched — but it's worth asking your installer whether they expect to join it once details are published. Whatever financing is on offer, it's still worth checking any quote against our "is my quote fair" tool before you sign, since the scheme as reported changes how you pay, not what the job itself should cost. We'll update our guides with confirmed rates and eligibility as soon as the Treasury publishes them.