Offer finance for heat pumps

Heat pumps made affordable for UK homes and businesses

Heat pumps have moved from niche technology to a mainstream choice that can lower bills and carbon emissions. The UK government’s Boiler Upgrade Scheme currently offers up to £7,500 towards air or ground source heat pumps in England and Wales, and £5,000 for eligible biomass boilers. From November 2025, there is also a £2,500 grant for air-to-air heat pumps, a versatile option that heats in winter and cools in summer. With the programme extended and funding doubled to £295 million for 2025-26, there is more certainty and capacity to meet rising demand.

The upfront cost barrier is real, but it is now more navigable. The grant is applied by your MCS-certified installer and deducted from your invoice, reducing what you pay on day one. Many households then combine the grant with a personal or green energy loan to spread the balance over time. For a single-room air-to-air unit, the new grant can bring the net cost under £1,000 in some cases, which is a material shift in affordability.

Applications have surpassed 90,000, a sign that the scheme works in practice. There is no mandatory insulation requirement to qualify, though better insulation still improves outcomes. Government aims for 600,000 yearly installations by 2028, which signals long-term support rather than a short-lived incentive. If you want lower running costs, a quieter home without a gas boiler, and protection from volatile fuel prices, a heat pump backed by a suitable finance plan can make sense. Kandoo helps you line up the funding alongside your installer so you can make the switch with confidence.

Understanding APR is not just about percentages - it is about what you will pay in real terms over the life of your loan.

Who benefits most

If you own a property in England or Wales with a fossil fuel boiler and plan to stay for several years, a heat pump can improve comfort and cut emissions. Landlords and small businesses can also apply for eligible non-domestic buildings. If you are on a lower income or live in a hard-to-heat home, additional support may be available through ECO4. In Scotland, separate options like Home Energy Scotland loans may be more suitable. Kandoo focuses on finance solutions that match your grant position and installation plan.

Your finance and grant choices

1. Boiler Upgrade Scheme grant - £7,500 off air or ground source.

2. Air-to-air heat pump grant - £2,500 from November 2025.

3. Personal loan - fixed monthly repayments to spread costs.

4. Green energy loan - products tailored to home upgrades.

5. Installer finance - deposit plus low or zero-interest options.

6. Additional support - ECO4 for eligible low-income households.

Money, impact and risks at a glance

Can you apply

You must own the property in England or Wales and be replacing a fossil fuel system such as gas, oil or LPG. Hybrids that keep the old boiler do not qualify. An MCS-certified installer must design and install the system, and they will handle the application on your behalf. The grant is deducted from your invoice once the voucher is issued. Recent updates removed mandatory insulation checks, although a sound EPC and sensible fabric upgrades still help performance. Homes and certain non-domestic buildings can apply. There is no income test, and applications to date show broad uptake across typical households. If you live in Scotland or Northern Ireland, equivalent support is available through separate national schemes. Kandoo can help you line up finance that complements your grant and installation timeline.

From enquiry to warm home - the simple path

1. Check property and fuel type against scheme rules.

2. Get quotes from MCS-certified installers for your home.

3. Choose system and confirm grant eligibility and value.

4. Arrange finance to cover your post-grant balance.

5. Installer applies, voucher issued and installation scheduled.

6. System commissioned, grant deducted, repayments begin.

Key advantages and trade-offs

Before you sign anything

Model selection and sizing matter more than headline efficiency figures. Ask your installer for heat loss calculations, realistic running cost estimates, and noise data. Confirm that the hot water cylinder and radiators are appropriate for low flow temperatures. Finance should be sized to what you can comfortably repay even if energy prices fall. Look for no-penalty overpayments so you can reduce interest if circumstances improve. If you rent out property, consider tenant comfort and EPC impacts. Finally, book an installation slot early if you want completion before winter, as demand spikes when temperatures drop.

Alternatives to consider

1. High-efficiency gas boiler with smart controls while preparing for a future heat pump.

2. Hybrid approach without BUS - only if grant is not essential.

3. Whole-home insulation upgrade to cut demand first.

4. Solar PV and battery to offset electricity use and bills.

Frequently asked questions

Q: How much could I actually save on bills? A: Savings depend on your property and tariffs. Well-designed air source systems typically reduce running costs versus older gas or oil boilers, with greater gains where insulation is solid.

Q: Is insulation still required for the grant? A: No. There is no mandatory insulation requirement. However, improving fabric efficiency increases comfort and maximises a heat pump’s coefficient of performance.

Q: Who applies for the Boiler Upgrade Scheme voucher? A: Your MCS-certified installer applies and manages the process. The grant is deducted from the final invoice after commissioning and compliance checks.

Q: What about air-to-air heat pumps? A: From November 2025, a £2,500 grant supports air-to-air units. They are ideal for single rooms or zones and can provide summer cooling. They do not replace a full wet central system.

Q: Are there extra options for lower-income households? A: Yes. ECO4 supports fuel-poor and low-income homes and can work alongside the heat pump grant. Regional schemes, such as interest-free loans in Scotland, may also help.

Q: Is there enough funding available? A: The government doubled the scheme budget to £295 million for 2025-26 and added extra allocation for voucher certainty, reducing the risk of delays as demand grows.

How Kandoo helps you switch smoothly

Kandoo is a UK-based retail finance broker that connects you with lenders for home energy upgrades. We work alongside your installer so the grant is applied first, then finance covers the remainder with clear, fixed repayments. Our panel helps you compare options and choose terms that fit your monthly budget and plans.

Important information

This guide is for general information only and is not financial advice. Eligibility, funding and interest rates can change. Always check current scheme rules and assess affordability before entering any finance agreement.