Home energy guide · New scheme
Warm Homes Loan: does 0% finance make solar, a battery or a heat pump pay?
Since 27 October, UK homeowners can borrow for solar panels, a battery or a heat pump at 0% or a low rate, through the government's new Warm Homes Loan Scheme. Cheap money is nice. But does the saving on your bill actually cover the repayment?
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The short version: a cheap loan doesn't make a good upgrade better or a bad one good. It changes when you pay. In our examples, solar comes closest to paying its own way: on a 10-year loan the repayment (about £79 a month) roughly matches the saving (about £74). A battery on its own and a heat pump in a gas home cost more each month than they save, so they make sense for other reasons, not as a money-maker.
Work out your own solar saving first →
What the scheme is
The government pays lenders so they can offer lower rates or longer interest-free periods. It's still a loan: you repay every pound. You apply to a lender, or through your installer, not to the government.
- Who: you must own the home (mortgage is fine), it must be residential and in the UK.
- What: heat pumps, solar panels, batteries, heat network connections, small wind and micro-hydro. Insulation isn't on the list.
- How much: up to £15,000 for solar, £15,000 for a battery, £20,000 for an air-to-water heat pump, £35,000 for ground source.
- Who fits it: an MCS-certified installer. No DIY.
- Lenders: ten so far, including HomeServe (with E.ON), Hometree, Sunsave, Tandem, The Money Co-op and South Manchester Credit Union.
Two examples of what's on offer (checked 4 November 2026): HomeServe Finance via E.ON offers 0% over up to 5 years for solar and batteries or 6 years for heat pumps, or 4.6% APR over 10 years. The Money Co-op lends £7,500 to £25,000 at 2.7% APR over 3 to 7 years, but has paused new applications because of demand.
The one test that matters
Divide your yearly saving by 12 and put it next to the monthly repayment. If the saving is bigger, the upgrade pays its own way from day one. If it's smaller, you're topping it up from your pocket until the loan ends.
Here's how that plays out with typical prices and the savings from our own guides.
Solar panels: the closest to self-funding
A typical 4.5 kWp system costs about £7,600. In our solar payback guide, a London home that also charges an EV saves about £884 a year, or about £74 a month.
- 0% over 5 years: about £127 a month. You're about £53 a month down for five years, then it's all saving. Total repaid: £7,600.
- 2.7% over 7 years: about £99 a month, about £740 in interest.
- 4.6% over 10 years: about £79 a month. Close to break-even each month, but about £1,840 in interest, which is two years of savings.
Use less of your own power, or live further north, and the saving drops. Run your roof through the solar calculator before you sign.
A battery on its own: not a money-maker on a loan
A typical battery costs about £6,500 fitted and, in our battery savings guide, saves about £512 a year (about £43 a month) by charging on a cheap night rate.
That's well short of the repayment: about £108 a month at 0% over 5 years, or about £67 at 4.6% over 10 years. Over those 10 years you'd repay about £8,080 against roughly £5,120 saved. Thinking of one without solar? Our battery-without-solar guide runs the numbers.
Heat pumps: the grant does the heavy lifting
The Boiler Upgrade Scheme takes £7,500 off a typical £12,000 air source heat pump, so you'd borrow about £4,500. The loan and the grant can be combined.
- Gas home: it saves about £106 to £290 a year (£9 to £24 a month) in our running-cost guide. Repayments are about £63 a month at 0% over 6 years. It only stacks up if your boiler needs replacing anyway, so compare against the price of a new boiler.
- Oil or LPG home: the grant is £9,000 until 31 March 2027, leaving about £3,000. It saves about £338 a year (£28 a month), against about £42 a month at 0% over 6 years or £31 at 4.6% over 10. That's the closest a heat pump gets to paying its own way, and closer still if the oil boiler needs replacing anyway.
See the numbers
| Upgrade | Borrow | Saving a month | 0% (5 yrs; heat pump 6 yrs) | 2.7% APR, 7 yrs | 4.6% APR, 10 yrs | Typical 8% loan, 7 yrs |
|---|---|---|---|---|---|---|
| Solar, 4.5 kWp | £7,600 | £74 | £127 | £99 | £79 | £118 |
| Battery, 10 kWh | £6,500 | £43 | £108 | below £7,500 minimum | £67 | £101 |
| Heat pump, gas home (after £7,500 grant) | £4,500 | £9–£24 | £63 | below £7,500 minimum | £47 | £70 |
| Heat pump, oil home (after £9,000 grant) | £3,000 | £28 | £42 | below £7,500 minimum | £31 | £47 |
| Loan | Monthly | Total repaid | Interest |
|---|---|---|---|
| 0%, 5 years (HomeServe via E.ON) | £127 | £7,600 | £0 |
| 2.7% APR, 7 years (The Money Co-op, paused) | £99 | about £8,340 | about £740 |
| 4.6% APR, 10 years (HomeServe via E.ON) | £79 | about £9,440 | about £1,840 |
| 8% loan, 7 years (government's "regular loan" example) | £118 | about £9,950 | about £2,350 |
Repayments are our standard loan calculations at the rates shown; check them against each lender's own quote. The 2.7% figures match The Money Co-op's representative examples, and the 4.6% figures match HomeServe's (for example £9,695 over 120 months at £100.38). The Money Co-op's minimum loan is £7,500, so smaller jobs need another lender. Costs: Energy Saving Trust typical prices. Savings: our guides, using the Ofgem price cap of 26.32p a kWh (Oct–Dec 2026) and the assumptions explained on each page. Savings move with energy prices; see our January 2027 forecast.
Before you sign
- Get the quote first, then the loan. Lenders want an MCS installer's quote, and work must not start before approval. The Money Co-op says deposits paid before approval can't be covered.
- Compare the total repayable, not just the monthly figure, including any fees. The government's own guidance says the same.
- Check who you're tied to. Some lenders only work with partner installers. Others let you pick any MCS-certified installer.
- Mind the April 2027 deadline. Installed solar, batteries and heat pumps have 0% VAT until 31 March 2027, then 5%. On a £7,600 solar job that's £380 more. The extra £1,500 grant for oil and LPG homes also ends on 31 March 2027.
- Pair it with the right tariff. The government says a time-of-use tariff can add up to £300 a year to the savings. See our battery tariff guide and heat pump tariff guide.
- On a low income? You may qualify for free upgrades through the Warm Homes: Local Grant instead, says GOV.UK.
About that "save up to £550 a year" headline: it's the government's figure for a heat pump, battery and solar together. Your own number depends on your roof, your heating and your tariff.
Guernsey and Jersey: the scheme is UK-only, so island homes can't use it. For island numbers, see home batteries in Guernsey and Jersey.
Prices with and without VAT
Solar panels, batteries and heat pumps installed in a home: 0% VAT until 31 March 2027, then 5% (HMRC VAT Notice 708/6). A £7,600 solar job becomes £7,980, a £6,500 battery £6,825 and a £12,000 heat pump £12,600. Loan interest has no VAT. Home electricity in Great Britain: 0% VAT from 1 October 2026 to 30 June 2027, normally 5% (HMRC VAT Notice 701/19, checked 4 Nov 2026).
Frequently asked questions
What is the Warm Homes Loan Scheme?
A government-backed scheme, launched on 27 October 2026, that pays lenders to offer cheaper finance for heat pumps, solar panels, home batteries and a few other low-carbon upgrades. It's a loan, not a grant: you repay every pound you borrow. You apply to a participating lender or through an installer, not to the government.
Who can get a Warm Homes loan?
You must own the home (with or without a mortgage), it must be residential and in the UK, and the work must be done by an MCS-certified installer. Lenders add their own credit and affordability checks. HomeServe, for example, asks for a minimum individual income of £12,000 and three years' address history.
How much can I borrow?
The scheme caps are £15,000 for solar panels, £15,000 for a battery, £20,000 for an air-to-water heat pump and £35,000 for a ground source heat pump, according to the government factsheet. Individual lenders can set lower limits and minimums; The Money Co-op, for example, lends £7,500 to £25,000 in total.
Is a 0% Warm Homes loan worth it for solar panels?
Often, if you can afford the repayments. On our example, a £7,600 system saving about £884 a year, 0% over five years costs about £127 a month against about £74 a month saved, so you're out of pocket for five years and then the savings are yours. A 10-year loan at 4.6% APR costs about £79 a month, roughly matching the saving, but adds about £1,840 in interest. These are illustrations, not advice.
Can I combine a Warm Homes loan with the Boiler Upgrade Scheme grant?
Yes. The Boiler Upgrade Scheme grant (£7,500, or £9,000 for oil and LPG homes until 31 March 2027) comes off the price first, and the loan can cover the rest. You can't use the loan and another government grant to pay for the same part of the work.
Can I get one in Guernsey or Jersey?
No. The property must be in the UK, and the Channel Islands aren't part of the UK for this scheme. The Money Co-op, for example, says its loan doesn't cover the Channel Islands.
Related guides
- How much do solar panels cost in 2026?
- How much does a home battery cost?
- The Boiler Upgrade Scheme
- January 2027 price cap forecast
Sources (checked 4 November 2026 unless stated)
- DESNZ: Warm Homes Loan Scheme factsheet (27 Oct 2026): loan caps, lenders, £550 and £300 savings claims, 8% loan example.
- GOV.UK: Warm Homes Loan Scheme, eligibility, how to apply and lenders.
- E.ON Next: Warm Homes Loans: HomeServe Finance 0% terms, 4.6% APR examples, eligibility.
- The Money Co-op: Warm Home Loan: 2.7% APR, £7,500–£25,000, applications paused.
- GOV.UK: Boiler Upgrade Scheme, what you can get (checked 27 Oct 2026).
- HMRC VAT Notice 708/6: energy-saving materials.
- Energy Saving Trust: Solar panels and Air source heat pumps (typical costs, checked 27 Oct 2026).
- Ofgem price cap, 1 Oct–31 Dec 2026.