Warm Homes Loan Scheme: help with the cost of solar panels, heat pumps and home energy improvements

Making your home more energy efficient can help you take greater control of your energy use and potentially reduce your bills. But the upfront cost of installing technology such as solar panels or a heat pump can be expensive.

The new Warm Homes Loan Scheme aims to make these improvements more affordable by offering access to low-interest and, in some cases, interest-free loans.

The scheme is available across the UK, including Wales, and allows eligible homeowners and private landlords to spread the cost of improvements over time. Where eligible, the scheme can also be used alongside the Boiler Upgrade Scheme, helping to cover costs remaining after the Boiler Upgrade Scheme grant has been applied.

What is the Warm Homes Loan Scheme and how does it work?

The Warm Homes Loan Scheme is a UK Government-supported initiative that helps eligible property owners access more affordable loans for home energy improvements.

Rather than paying the full cost of installing solar panels, a heat pump or a home battery upfront, you may be able to spread the cost through regular loan repayments.

The government provides financial support to participating lenders, helping them offer lower interest rates than they would otherwise charge.

Some lenders are offering interest-free loans, while others offer reduced interest rates. The amount you can borrow, interest rate and repayment period will depend on the lender and your circumstances.

It's important to know that this is a loan, not a grant.

You'll need to repay the money you borrow, so it's worth comparing your options before making a decision.

What home improvements are eligible for a Warm Homes Loan?

The Warm Homes Loan Scheme covers a range of technologies that can help households generate renewable electricity, store energy or heat their homes more efficiently.

Eligible improvements include:

• Solar panels: Generate renewable electricity from sunlight, helping reduce the amount of electricity you need to buy from the grid.

• Heat pumps: Use energy from the air or ground to heat your home more efficiently. Eligible systems include certain air source and ground source heat pumps.

• Home battery storage: Store electricity, including energy generated by solar panels, to use when you need it.

• Heat network connections: Connect eligible homes to a shared heating system, where available.

• Other micro-scale renewable energy systems: Including eligible domestic wind turbines and hydroelectric systems.

You may be able to use a loan for one improvement or combine several eligible technologies.

Some necessary installation work, such as associated electrical improvements, may also be covered.

Insulation, replacement windows and new gas boilers are not currently eligible under this scheme.

How much can you borrow?

The amount you can borrow depends on the type of improvement, the lender's requirements and your financial circumstances.

The scheme has maximum supported loan amounts for different technologies.

These are maximum amounts supported by the scheme, not amounts that every applicant will be able to borrow. Some technologies also have additional eligibility or certification requirements.

How much could you save on loan repayments?

The UK Government says the scheme could reduce interest rates by up to five percentage points compared with equivalent standard lending products.

For example, someone borrowing £10,000 over seven years at an 8% interest rate would typically repay around £155 a month.

Through the Warm Homes Loan Scheme, they could save up to £285 a year on loan repayments, depending on the offer available.

Actual interest rates and repayments will vary, so it's important to compare lenders and consider the total amount you'll repay.

Who is eligible for a Warm Homes Loan in Wales?

You may be eligible for the Warm Homes Loan Scheme if:

• You own a residential property in Wales.

• You live in the property or are a private landlord applying for a property you own.

• You're planning to install an eligible home energy improvement.

• You meet the participating lender's eligibility, credit and affordability requirements.

You do not need to own your home outright. Having a mortgage does not automatically prevent you from applying.

However, tenants cannot apply directly. If you're renting and interested in home energy improvements, you could speak to your landlord about the available options.

Not everyone who applies will be approved for a loan. Each participating lender makes its own lending decisions.

Could these improvements reduce your energy bills?

Solar panels, heat pumps and battery storage can help you use energy differently and potentially reduce your household energy costs.

• Solar panels generate electricity that you can use in your home, reducing how much you need to purchase from your electricity supplier.

• Battery storage allows you to store electricity for later use. This can be particularly helpful if you have solar panels or a suitable electricity tariff.

• Heat pumps provide an efficient alternative to traditional fossil fuel heating systems. Whether they reduce your heating bills depends on factors including your current heating system, energy tariffs and how your home uses heat.

Cost savings will depend on your property, the technologies installed, your energy use and future energy prices.

Before making any improvements, it's worth getting advice about which options are suitable for your home.

How to apply for a Warm Homes Loan in Wales

You apply for a Warm Homes Loan through a participating lender, rather than directly through the UK Government.

Here are some steps to help you get started.

1. Consider which improvements are right for your home

Think about how your home currently uses energy and which technologies could make a difference.

You might be interested in generating your own electricity with solar panels, replacing an older heating system or storing electricity in a home battery.

2. Check whether you could get grant funding first

Before borrowing, check whether you're eligible for grants or other financial support that could reduce the amount you need to pay.

You may be able to combine a Warm Homes Loan with support from the Boiler Upgrade Scheme, provided you meet the relevant requirements and do not receive funding twice for the same costs.

3. Find an appropriately certified installer

With the exception of heat network connections, all works must be completed by an installer certified through the Microgeneration Certification Scheme (MCS).

It's worth getting more than one quote so you can compare installation costs, warranties and the proposed improvements.

Find an installer using the MCS directory.

4. Compare participating lenders

Different lenders offer different rates, repayment periods and loan products.

Some loans may be available directly through a lender, while others can be arranged through participating installers or retailers.

Check the interest rate, any fees, the monthly repayments and the total amount repayable before deciding.

5. Apply and arrange the installation

Once you've chosen a lender, you'll need to complete its application process.

The lender will assess your eligibility, creditworthiness and ability to repay the loan.

If your application is approved, you can arrange for the eligible improvements to be installed in accordance with your finance agreement.

Find out more and apply through the official Warm Homes Loan Scheme website.

What other financial support is available for home improvements in Wales?

A loan isn't necessarily the right option for everyone, particularly if you're on a low income or concerned about taking on additional monthly repayments.

Other support may be available.

Nest – Welsh Government Warm Homes Programme

Nest offers free, impartial advice about saving energy and improving energy efficiency at home. Households on low incomes or means tested benefits living in energy inefficient homes may also qualify for free home energy improvements.

Boiler Upgrade Scheme

The Boiler Upgrade Scheme provides grants towards the cost of eligible low-carbon heating systems in England and Wales.

The Warm Homes Loan scheme can be used in combination with the Boiler Upgrade Scheme to help cover remaining installation costs.

Checking which support you're eligible for before taking out a loan could help you find the most suitable and affordable option for your household.

Frequently asked questions about the Warm Homes Loan Scheme

Is the Warm Homes Loan Scheme a grant or a loan?

It's a loan, so you must repay the money you borrow. Government support helps participating lenders offer lower borrowing costs. Some lenders may offer interest-free finance.

Can I get an interest-free loan for solar panels in Wales?

Potentially. Some participating lenders offer interest-free loans through the scheme. Availability, eligibility and repayment terms depend on the lender and the product.

Can I get a loan to install a heat pump in Wales?

Yes. Eligible homeowners and private landlords may be able to apply for a Warm Homes Loan to help cover the cost of installing an eligible heat pump.

You may also qualify for a Boiler Upgrade Scheme grant.

Can I use the loan to pay for insulation or new windows?

No. Insulation and replacement windows are not currently included in the Warm Homes Loan Scheme.

Do I need to have a good credit score?

Participating lenders carry out their own creditworthiness and affordability checks. Having a poor credit history does not automatically mean you cannot enquire, but approval is not guaranteed.

Can I apply if I already have a mortgage?

Yes. Having an existing mortgage does not automatically prevent you from applying. Your lender will consider your financial circumstances and existing commitments.

Can landlords apply for a Warm Homes Loan?

Yes. Eligible private landlords can apply for home energy improvements to residential properties they own, subject to the lender's requirements.

Can tenants apply?

No. The property owner must apply. If you're a tenant, you can speak with your landlord about potential improvements to your home.

Will solar panels or a heat pump definitely reduce my energy bills?

No. Savings depend on your property, energy use, installation and energy tariffs. Ask your installer to explain the expected running costs and potential savings before committing.

Can I use a Warm Homes Loan alongside the Boiler Upgrade Scheme?

Yes, where eligible. For example, you may be able to use a Boiler Upgrade Scheme grant towards a heat pump and a Warm Homes Loan to cover remaining eligible costs. The same costs cannot be funded twice.

Do I need an Energy Performance Certificate (EPC)?

The Warm Homes Loan Scheme does not require a minimum EPC rating or an EPC as a general condition, although individual lenders may have their own requirements.

Where can I find a participating lender?

The official GOV.UK website provides information about participating lenders, available loan products and how to apply.

What happens if I struggle to repay the loan?

Contact your lender as soon as possible if you're having difficulty making repayments. Before taking out a loan, make sure you understand the repayment schedule, fees and what happens if you miss a payment.

Find out if a Warm Homes Loan is right for your home

If you're considering solar panels, a heat pump or battery storage for your home, the Warm Homes Loan Scheme could provide another way to manage the upfront cost.

Taking time to understand your options, compare quotes and check what financial support is available can help you make a decision that's right for your home and budget.

Thinking about getting a heat pump? Hear from other homeowners

If you're considering making the switch to a heat pump, you can also read about Neil and Rhiannon's experiences of having one installed, including what it's like to live with a heat pump day to day.