UK launches low- and no-interest loans to help households fund heat pumps, solar panels

Government-backed Warm Home Loans scheme aims to cut energy bills by hundreds of pounds a year with no upfront cost, but heat pump grant cuts are reportedly planned

By LineZotpaper AI staff

Published27 October 2026

Updated27 October 2026

Read Time2 min

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Households across the UK can now apply for interest-free or low-interest loans of up to £35,000 to fund low-carbon home upgrades such as heat pumps, solar panels and batteries, under a new government-backed scheme launched on Tuesday. The Warm Home Loans scheme could save households up to £550 a year on energy bills, rising by a further £300 with a time-of-use tariff, according to the government.

The Warm Home Loans scheme offers loans ranging from £7,500 to £35,000, with energy suppliers including British Gas and E.On partnering with lenders to offer discounted rates. People replacing a gas boiler with an air-source heat pump can secure loans of up to £10,000, while those installing ground-source heat pumps can borrow up to £35,000. The loans complement existing government grants of up to £9,000 a year for households installing heat pumps, particularly those not connected to the gas grid.

Energy Secretary Miatta Fahnbulleh said the loans would help families upgrade their homes with no upfront costs, making them warmer and cheaper to run. Chris Norbury, chief executive of E.On UK, said a trial in Coventry showed fuel-poor customers saved more than £250 a year on average by combining a home battery with a time-of-use tariff. He called the scheme an opportunity to remove barriers to low-carbon technologies.

The scheme launches a day before Chancellor John Healey's first budget, which reportedly includes plans to scale back heat pump grants. Sources say Treasury officials consider the current grant scheme a subsidy used mainly by middle-class households and plan to cut hundreds of millions from its £2.7bn five-year budget. However, grants of up to £9,000 a year are likely to remain available for households not connected to the gas grid.

Participating lenders include Tandem Bank, Homeserve, HTG Finance, Propensio, Secure Trust Bank, Selina Finance, South Manchester Credit Union, Sunsave, The Money Co-op and This Bank.

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Analysis

Why This Matters

The scheme could help thousands of households reduce energy costs without upfront capital, potentially easing the UK's cost-of-living pressures.
It supports the government's net-zero targets by making low-carbon technologies more accessible to a wider range of incomes.
The reported plan to cut heat pump grants raises questions about the overall affordability of the transition for middle-income households, who may now rely more on loans.

Background

Energy costs in the UK have soared over the past year, driving record demand for home efficiency upgrades. Heat pumps are a key technology for reducing reliance on fossil fuels for heating, but installation costs remain high, often exceeding £10,000. The government has previously offered grants through the Boiler Upgrade Scheme, but uptake has been limited by upfront costs. The new loan scheme is designed to spread repayments over many years.

Key Perspectives

Energy Secretary Miatta Fahnbulleh: says the loans will make energy more affordable by allowing families to upgrade homes with no upfront cost, making them warmer and cheaper to run. Chris Norbury, CEO of E.On UK: says the scheme removes barriers to low-carbon technologies and builds on a trial in Coventry where fuel-poor customers saved over £250 a year. Treasury officials (via sources): reportedly view the current heat pump grant scheme as a subsidy used mainly by middle-class households and plan to cut hundreds of millions from its budget.

What to Watch

The 30 October budget announcement, which may confirm the extent of cuts to heat pump grants.
Take-up rates for the new loans, especially among lower-income households and those off the gas grid.
Whether energy suppliers expand their partnerships to offer loans more widely, potentially driving down installation costs.

Sources

Homes across UK to get low- or no-interest loans to fund solar panels and heat pumps · The Guardian
Homes across UK to get low- or no-interest loans to fund solar panels and heat pumps · The Guardian
Homes across UK to get low- or no-interest loans to fund solar panels and heat pumps · The Guardian

Checked

12 claims in this story checked against 1 source: 12 supported.

Show each claim

SupportedThe UK has launched low- or no-interest loans to help households fund heat pumps and solar panels.Business | The Guardian: “The government-backed Warm Home Loans scheme, which launched on Tuesday, could mean thousands more households are able to access low-carbon energy alternative technologies”
SupportedThe scheme aims to cut energy bills by hundreds of pounds a year with no upfront cost.Business | The Guardian: “Households across the UK can now cut their energy bills by hundreds of pounds a year at no upfront cost by applying for interest-free or “low-interest” loans”
SupportedHeat pump grant cuts are reportedly planned.Business | The Guardian: “which reportedly will include plans to scale back heat pump grants made through its boiler upgrade scheme.”
SupportedHouseholds across the UK can apply for loans of up to £35,000 for low-carbon home upgrades, including heat pumps, solar panels and batteries.Business | The Guardian: “thanks to loans ranging from £7,500 to up £35,000. ... upgrades such as heat pumps, batteries and solar panels.”
SupportedThe scheme could save households up to £550 a year on energy bills, with a further £300 a year possible with a time-of-use tariff, according to the government.Business | The Guardian: “Installing a heat pump, battery and solar panels could save households up to £550 a year on their energy bills, rising by a further £300 a year with a time-of-use tariff, according to the government.”
SupportedThe loans range from £7,500 to £35,000, and British Gas and E.On have partnered with lenders to offer discounted rates.Business | The Guardian: “loans ranging from £7,500 to up £35,000. Energy suppliers including British Gas and E.On have partnered with lenders ... to offer the loans directly to customers at a discounted rate”
SupportedBorrowers replacing a gas boiler can get up to £10,000 for an air-source heat pump or £35,000 for a ground-source heat pump.Business | The Guardian: “People interested in swapping their gas boiler for an air-source or ground-source heat pump could secure loans of up to £10,000 or £35,000 respectively”
SupportedExisting government grants of up to £9,000 a year are available for households installing heat pumps, with grants likely to remain for households not connected to the gas grid.Business | The Guardian: “the government’s existing scheme which offers grants of up to £9,000 a year for households installing the replacements for fossil fuel heating. ... grants of up to £9,000 a year are likely to remain available to households that are not connected to the gas grid”
SupportedEnergy Secretary Miatta Fahnbulleh said the loans would help families upgrade their homes with no upfront costs and make them warmer and cheaper to run.Business | The Guardian: “Miatta Fahnbulleh, the energy secretary, 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.””
SupportedE.On UK chief executive Chris Norbury said a Coventry trial found fuel-poor customers saved more than £250 a year on average by combining a home battery with a time-of-use tariff.Business | The Guardian: “Chris Norbury, the chief executive of E.On UK, said that a recent trial showed that fuel-poor customers in Coventry were able to save more than £250 a year on average by combining a home battery with a time of use tariff”
SupportedThe scheme launched a day before Chancellor John Healey's first budget.Business | The Guardian: “The government set out the terms of the new scheme a day before the chancellor, John Healey, delivers his first budget on Wednesday”
SupportedSources say Treasury officials view the grant scheme as a subsidy used mainly by middle-class households and plan to cut hundreds of millions from its £2.7bn five-year budget.Business | The Guardian: “sources say hundreds of millions of pounds will be cut from its £2.7bn five-year budget because Treasury officials consider it a subsidy used mainly by middle-class households.”