Most homeowners know about the Government's Boiler Upgrade Scheme, but far fewer realise their bank or mortgage provider could help pay for a heat pump too.
According to renewable heating specialists Dwellow, a growing number of UK lenders are now offering cashback, interest-free borrowing and preferential mortgage products for customers installing low-carbon heating and other energy-efficient home improvements.
The incentives reflect a wider shift in the banking sector, with lenders increasingly viewing energy-efficient homes as lower-risk assets that are cheaper to run and more resilient to future energy price shocks.
"One of the first things we tell customers is to check with their bank or mortgage provider before they go ahead with a heat pump," says Ian McLaren, co-founder of Dwellow.
"Even among customers who bank with lenders offering generous cashback, I'd estimate around 60 to 70 per cent have no idea the schemes even exist. They're simply not very well advertised.
"For many people, that's the missing piece of the puzzle. Between the Boiler Upgrade Scheme and bank incentives, the cost of installing a heat pump can be significantly lower than people expect, and in many cases the same price, if not cheaper than installing a new gas boiler.”
The Government's Boiler Upgrade Scheme now offers grants of up to £9,000 for eligible households replacing oil or LPG boilers, while many gas boiler replacements remain eligible for £7,500. Increasingly, banks are now adding their own incentives on top through cashback or low-cost finance.
"Most people know about the Government grant, but far fewer realise they could unlock another £2,000 from their lender," Adam Raw, Co-Founder of Dwellow adds.
"These incentives aren't just about heat pumps either. Depending on the lender, you might find cashback for solar panels or batteries, access to interest-free loans, preferential green mortgage rates or additional borrowing for energy-efficiency improvements. It's always worth asking the question."
The answer lies in something most homeowners have never heard of: financed emissions.
Banks are increasingly setting targets to reduce the carbon emissions associated with the homes and businesses they finance. Because residential mortgages make up a significant proportion of many lenders' balance sheets, encouraging customers to improve the energy efficiency of their homes is becoming an important part of meeting those commitments.
"Banks aren't offering these incentives out of generosity, they're increasingly recognising that energy-efficient homes make good business sense," says Ian.
"Many major lenders have committed to reducing the carbon emissions associated with the homes they finance, so encouraging customers to install heat pumps, solar panels and insulation helps them move towards those targets."
McLaren explains that the concept is straightforward.
"If a bank has lent against a property that produces carbon emissions every year, those emissions form part of the bank's financed emissions. Residential mortgages account for a huge proportion of many banks' balance sheets, so improving the efficiency of those homes is one of the biggest opportunities they have to reduce their carbon footprint."
He believes this is why the number of green finance products continues to grow.
"For homeowners, it's a win-win. The bank moves closer to its sustainability targets, while customers benefit from lower installation costs, lower energy bills and, in some cases, access to cheaper finance. We expect these incentives to become even more common over the next few years."
Dwellow has identified a growing number of lenders rewarding customers who invest in cleaner home heating. Each scheme will have specific eligibility criteria and homeowners should check the small print when contacting their bank.
Barclays
Halifax
Lloyds Bank
Nationwide Building Society
Santander
Virgin Money
HSBC
*Offers are subject to eligibility criteria and may change.
The trend is expected to accelerate following the Starmer Government's 2026 Warm Homes Plan, a £15bn investment which aims to improve home efficiency and promote clean heat upgrades.
Dwellow says many homeowners can combine multiple incentives, potentially reducing the upfront cost of a heat pump by thousands of pounds.
For example, an eligible homeowner may be able to combine:
"The biggest mistake homeowners make is assuming the Government grant is the only help available," adds Raw.
"The reality is that banks are becoming active partners in the transition to cleaner heating. Spending five minutes checking your mortgage benefits could be one of the easiest ways to reduce the cost of your installation."
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