Grants and funding options for home energy improvements

Making your home more energy efficient can be an excellent long-term investment. And to help with the improvement costs, there are a number of grants and funding options available.

We’ve summarised some of the main ways you could finance your home improvement, below. But please note that we’re not providing financial advice. To learn about the types of financing that could be suitable for your personal situation, you can contact the UK government’s Money Advice Service, Citizens Advice or an independent financial adviser.

The Snugg team is working hard to bring you access to some exclusive financing options. If there’s something you’d really like to see here, please let us know by emailing hello@snuggenergy.com

Grants

A grant is money given to you that you don’t have to pay back.

When it comes to funding your home energy efficiency improvements, there are a number of grants that you may be eligible for.

Grants can be provided by energy providers, national government and local government. But the eligibility criteria differ for each grant.

You can find which grants you’re eligible for by signing up to Snugg. And you can learn more about the various schemes by visiting the gov.uk website, Home Energy Scotland, Northern Ireland Energy Advice or Nest if you live in Wales.

Personal savings

If you’ve got enough savings (and enough left over to cover life’s unexpected emergencies), you might want to consider using them to pay for your improvement in one go.

Although it might feel like a lot of money to spend at once, it could prove to be an effective long-term investment.

For example, if paying £10,000 now saved £1,000 a year in energy costs, you’d see a positive return on your investment within 10 years.

Increasing your mortgage

Banks often charge less interest on a mortgage than other types of loans. This is because the mortgage is secured (guaranteed) by the value of your home.

So increasing your mortgage to cover the cost of an improvement could prove better value than taking out a non-secured type of loan.

You’ll typically need to borrow more than £10,000 to increase your mortgage. The mortgage lender may even offer a discounted interest rate for ‘green’ home improvements.

But bear in mind that your monthly repayments could go up as a result. And your home may be repossessed if you don’t keep up repayments on your mortgage.

To learn more about your options, speak with your lender or a mortgage broker.

Equity release

If you’re over the age of 55, you may be able to release some of the equity (the portion of your home that isn’t covered by a mortgage) in your home to a specialist lender. This money can then be used to pay for your home improvement.

Usually, you won’t have to pay that money back until your home is sold after you die. And the money you release doesn’t count as taxable income.

However, interest will be charged on the equity that’s released. This could really add up if you live for a long time, reducing the equity in your home that can be passed on through inheritance.

You’ll want to speak with an independent financial adviser before releasing equity in your home as there are plenty of pros and cons to consider.

Personal loan

A personal loan is one that isn’t secured against your home or another asset. They’re the most common type of loan but they also typically charge the highest amount of interest.

Taking out a personal loan to fund your home improvement can be done easily and online if your finances are in good health. And you can often choose how long you’ll take to repay the loan (the longer you take, the lower the monthly repayment, but the higher the overall interest).

You can also get a personal loan from specialist lenders that cater to people with bad credit, for example. But specialist lenders often charge higher rates of interest.

With so many personal loans available, you’ll want to spend some time comparing the deals on offer. And wherever you take out a personal loan, you’ll need to make sure you can afford the monthly repayments. 

Product-specific finance

Some installers offer interest-free or relatively low-cost credit on improvements like boilers and double glazing.

But be aware that the interest rate might increase substantially after the initial interest-free period.

While you’re getting quotes for your home improvement, you may want to ask the installer about the payment terms of any financing they offer.