Making your home more energy efficient inevitably comes with a few overheads, and commonly those overheads reach into the tens of thousands. But fear not there are ways of financing these costs that can either reduce the personal cost to your wallet or break up the cost so you can pay for it in your own time.
Whether you’re looking to install underfloor heating, a new boiler or just want some new insulation, these things are going to cost you money, which in today’s climate isn’t always easy (or in any climate for that matter). But there is financial support out there, here we list a few options available to homeowners who want to make their homes more comfortable and more cost effective to run.
Here we look at:
- Generation payments
- Private financing options
- Public grants
If you’d like to get a full breakdown of what your home needs to improve its energy efficiency, reduce its running costs and see the impact it has on your house value then you can book a home assessment and plan with Furbnow. Book a home assessment and energy plan here.
Generation payments
1. Smart Export Guarantee (SEG)
Following the closure of the Feed-In-Tariff (FIT) scheme, the government recognised the need to pay small generators for their contribution to the grid. This means that if you own any of the below forms of energy generation you can receive payments for excess energy you don’t use but then goes back to the grid. These include:
- Solar Panels
- Wind Turbines
- Hydrogenerators
- Anaerobic digestion
- Micro-combined heat and power
The payments are made by energy suppliers. There are no set rates for SEG by the government, so as long as the tariff is set to above 0 suppliers can choose what to pay per kilowatt hour your generation puts on the grid.
It’s worth looking around to see what supplier is offering the best rates, although in many cases you need to have your energy supplied by the supplier to access their SEG payments, so it’s also worth seeing how much you’d pay for your energy from them too.
Financing Options
1. Green Home Mortgages
A common green finance product is the ‘green mortgage’. The incentives for banks is that if you have a more energy efficient home you’ll have more money to put towards your mortgage as you’re spending less on bills. And the incentive for homeowners is that you’ll have a better mortgage as a result of the changes you make, so remortgaging to a green mortgage can free up cash initially and give you a better fixed deal on your home.
Barclays green mortgage offers discounts on their standard mortgage rates if you buy a property with an EPC rating of B or above. Likewise Natwest also offers a 2 and 5 year fixed rate mortgage for customers who remortgage to Natwest with an EPC rating of A or B.
Building society Ecology also offers what they call C-Change Discounts. This means they’ll reduce your interest rates based on the energy efficiency of your property. So if you upgrade your EPC from D to C, you’d see discounts of 0.25% to 1.5% in your interest rate.
To be eligible you need to be doing one of the following:
constructing an energy-efficient self-build
- converting a redundant building
- renovating a dilapidated property
- purchasing an energy-efficient new build
2. Product Specific Financing
The most common form of financing you’ll find is around specific products for your home. At the moment, a number of energy suppliers offer interest free loans towards installing a new, more energy efficient boiler with a payback period of about 3 years. To give you an example:
E.on became the first major energy supplier to offer a 0% finance option on their boilers. You can pay either nothing upfront or 50% upfront and then pay the rest in instalments for up to 35 months.
This means that for a Worcester Bosch boiler at around £2,500, if you didn’t pay anything upfront you’d pay about £70 per month for 3 years. Pay half upfront and you’d pay half as much each month (£35 per month for 3 years).
3. Interest Free Credit Card
It’s unlikely that you’ll be able to cover the whole cost of a retrofit job using an interest free credit card, but you can get a couple of grand allowance to spend on one, which helps towards the initial costs of making home upgrades. Or it could cover the whole of one job, like have loft insulation installed.
The 0% APR period usually lasts between 18 and 31 months, allowing time to pay it off, and the card’s allowance can be in the thousands. So for large purchases like installing a heat pump or replacing your windows these can help spread the cost over the months.
If you want to find out more, then MoneySavingExpert has some great advice and shows comparisons between cards.
4. Equity release
Equity release is the process of freeing up the money attached to your home. You need to be over 55 to take out an equity release and this usually means that instead of paying back your mortgage each month, you pay it all off after you die or sell the property.
It does mean that you can take either a lump payment or payments in instalments according to the value of your property, so it can be a useful means towards paying for big jobs. (Which in turn, can increase the property’s value).
Grants
Grants aren’t available to everyone but if you’re eligible then they can help with specific sustainable upgrades for your home. Here are a few that might be interesting:
1. Boiler upgrade scheme (BUS):
The Boiler Upgrade Scheme is aimed at reducing the upfront cost of installing a low carbon heating system such as heat pumps. At the time of writing you can receive:
- £7,500 off the cost of installing an air source heat pump
- £5,000 off the cost of installing a biomass boiler
- £7,500 off the cost of installing a ground source heat pump
You’re eligible for the grant if you live in England or Wales and you own your property.
2. Energy Company Obligation (ECO):
ECO is a government energy efficiency scheme that’s focused on tackling fuel poverty. The grants are given out to medium and large energy suppliers who then have a target to hit in how they distribute the money.
The benefits can range from having insulation installed in your loft to getting a smart thermostat. To be considered eligible you need to either:
- Receive certain benefits and live in private housing
- Live in social housing
If you do claim benefits and live in private housing then you need to receive one of the following forms of benefits:
- Child Tax Credit
- Working Tax Credit
- Universal Credit
- Pension Guarantee Credit
- Pension Savings Credit
- Income Support
- income-based Jobseeker’s Allowance (JSA)
- income-related Employment and Support Allowance (ESA)
- Child Benefit
- Housing Benefit
You can read more about the criteria here.
3. Home Upgrade Grant (HUG)
Certainly a cosy sounding abbreviation. The HUG, currently in its second phase, is a round of funding for local authorities to improve the energy performance and heating systems of off-gas grid homes in England. So houses that have electric or oil heating.
The grant covers:
- Most insulation - loft, cavity wall and room-in-roof insulation
- Installation of low carbon heating solutions
- Installation of ventilation systems
The grant is based on a max of £25,000 of upgrades per property.
To be eligible you’ll need to have a household income of less than £20,000 per year after tax, national insurance, mortgage or rent costs and council tax. You can be either a homeowner or private renter to receive the grant.
If you think you’re eligible you can get in touch with your Local Net Zero Hub, which you can find here.
Read: Everything you need to know about insulation
4. Local Authority Delivery Scheme (LAD)
This slightly less cosy sounding abbreviation aims to increase the energy efficiency of low income, low energy performance homes. £500 million is being dispersed to 5 Net Zero Hubs which then work with local councils to distribute and invest the money in households.
Investments include:
- Cavity wall insulation
- Loft insulation
- New boiler
- Ventilation systems
- Double glazing
The focus is on households with energy performance ratings of E, F or G. If you think you’re eligible you can get in touch with your Local Net Zero Hub, which you can find here.
If you’d like to get a full breakdown of what your home needs to improve its energy efficiency, reduce its running costs and see the impact it has on your house value then you can book a home assessment and plan with Furbnow. Book a home assessment and energy plan here.
