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The Warm Homes Loan Scheme is designed for homeowners who can afford to repay a loan but have been put off by the high upfront cost
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Households could soon be able to borrow money for solar panels, batteries and heat pumps at lower interest rates under a new government-supported loan scheme expected to begin rolling out in the coming weeks.
The Warm Homes Loan Scheme is designed for homeowners who can afford to repay a loan but have been put off green home improvements by the high upfront cost or expensive finance.
Under the scheme, the government is making £300m of grant capital available to participating lenders, with the aim of reducing the cost of borrowing for home energy upgrades. The first round of applications from lenders has already closed.
Government rules describe an initial consumer launch phase beginning in September 2026, although the timetable is indicative. Lloyd Greenfield, founder and CEO of solar installer Glow Green, told The Independent that lenders working with the company are now expecting products to become available sometime in October.
The scheme could be particularly significant for solar panels, where households have traditionally had to find several thousand pounds upfront or take out relatively expensive finance.
“I think this is going to open up a massive part of the market,” Greenfield says, arguing that solar has until now largely appealed to people with enough savings to pay for an installation outright. “There are so many people out there who aren’t as fortunate to have savings of £10,000 or £15,000,” he said.
Read more: Best solar panels, compared
Despite being government-supported, the loans themselves will not come from the government.
Instead, banks and other participating lenders will offer their own finance products. The government will then provide lenders with a non-repayable capital grant worth up to 20 per cent of the eligible loan, once the installation has been completed and verified.
That effectively reduces the amount of capital the lender has at risk, allowing it to pass the benefit on to the customer through a lower interest rate. The scheme is intended to cut a lender’s normal annual fixed interest rate by up to around five percentage points, although the reduction can be smaller depending on the loan and the scheme’s grant cap.
It’s important to note that this doesn’t mean everyone will be offered the same rate. Individual lenders will continue to set their own prices, repayment terms and lending criteria.
Glow Green, which operates as an FCA-regulated credit broker rather than a lender, said the lenders on its panel currently enable it to offer finance at 8.9 per cent. Greenfield expects government support under the new scheme to allow it to offer some eligible customers a rate of 3.9 per cent, with finance available over as long as 10 years. Other installers and lenders could offer different rates.
Consumers should not have to make a separate application to the government to receive the support.
“There’s nothing that the homeowner needs to do,” Greenfield explains. “They don’t need to apply for a grant or jump through loads of hoops.”
Instead, participating lenders will handle the government side of the process after the customer applies for finance and passes the lender’s usual affordability and credit checks.
Under the scheme, government support is only available for loans lasting three years or longer.
The Warm Homes Loan Scheme covers a range of low-carbon home improvements. For solar PV, the maximum supported loan is £15,000, while another £15,000 limit applies to electrical battery storage. Batteries can be installed alongside new solar panels or added as a standalone system.
Air-to-water heat pumps can qualify for loans of up to £20,000 before any Boiler Upgrade Scheme grant is deducted, while the cap for ground-source heat pumps is £35,000.
An EV charger can also form part of an eligible solar or battery installation, although it cannot be financed by the scheme on its own.
Solar panels, batteries and heat pumps financed through the scheme will generally need to use MCS-certified products and be fitted by an MCS-certified installer.
Unlike some solar panel grants and funding schemes, the Warm Homes Loan Scheme is not specifically targeted at low-income households.
It is primarily intended for owner-occupiers and private landlords who can afford repayments but might not have the savings available to pay for an installation upfront.
There is no government-set income threshold. Instead, lenders will carry out their normal affordability and credit assessments before deciding whether to approve an application. Domestic properties anywhere in the UK can qualify, although the scheme will operate alongside existing programmes run by the devolved administrations.
That target market is one reason Greenfield believes the scheme could broaden the appeal of rooftop solar.
He described the market to date as being in an “early adoption phase”, dominated by households able to spend their savings on solar in return for lower electricity bills over the following years.
“I think we’ll move from this early adoption phase into what I think will be more of a mass adoption,” he said.
One potentially attractive feature of cheaper, longer-term borrowing is that some households could find the monthly savings from their solar panels cover a significant part of their loan repayments.
Greenfield said that, in theory, it might even be possible in some circumstances for the savings to exceed the cost of financing the installation. But he stressed that this is not something Glow Green promises customers.
Whether that happens will depend on several factors, including the cost and size of the solar installation, the interest rate and length of the loan, how much electricity the panels generate, how much of that power the household uses itself and how much it earns by exporting surplus electricity to the grid.
A lower interest rate therefore doesn’t automatically make a solar installation profitable, and households should compare the total amount repayable over the full loan term rather than looking only at the monthly payment.
The government’s latest scheme rules describe an initial consumer launch phase from September 2026, although they make clear that timings may change. The first application window for lenders has closed, and another is expected later in 2026.
Greenfield said that lenders working with Glow Green are now expecting the scheme to start rolling out during October.
The Department for Energy Security and Net Zero has also published an end-user privacy notice setting out how information will be handled when consumers start receiving loans through the scheme.
However, participating lenders, rates and the precise availability of individual products have yet to be fully announced publicly. Homeowners considering taking out finance now should therefore check the latest offers available rather than assuming a particular rate or launch date.
The government describes the Warm Homes Loan Scheme as a multi-year programme, meaning more lenders and finance products could become available as it expands.
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