Households to be offered free or cheap loans for solar panels, batteries and heat pumps under new Government scheme

Plans for these loans were first announced in January, as part of a wider Government push to boost home energy efficiency and cut bills in the long-term.

The Government says that Monday 26 October will "mark the launch" of its new 'Warm Homes Loan Scheme' – though it hasn't yet confirmed which lenders are taking part, the interest rates they'll charge, exactly who will be eligible or when applications will open.

How the new scheme will work

Under the scheme, participating lenders will offer loans at lower interest rates than would normally be available, with some households potentially able to borrow at 0% interest.

The loans will be partially backed by the Treasury, which the Government says should enable lenders to offer interest rates up to five percentage points lower than they otherwise would. For example, if a lender would normally charge 8% interest for borrowing to install solar panels, it could potentially offer a rate of 3% through the scheme.

Loans will run for a minimum of three years, and you'll be able to use them towards the following:

• Solar panels: up to £15,000.

• Electrical storage batteries: up to £15,000.

• Air-to-water source heat pumps: up to £20,000.

• Air-to-air source heat pumps: up to £10,000.

• Ground source heat pumps: up to £35,000.

• Biomass boilers: up to £20,000.

• Heat network connections: up to £7,500.

• Micro-renewable systems, such as domestic wind turbines: up to £20,000.

Under the plans, you'll be able to use the loans alongside the existing Boiler Upgrade Scheme grant – though whether you can get the full funding under both scheme caries by measure. This allows homeowners in England and Wales to get up to £9,000 towards the cost of replacing a fossil fuel boiler with a heat pump.

We don't yet know how these loans will compare to others

At the moment, the cheapest mainstream personal loans are typically around 5.9% APR (if borrowing £7,500 or more). While loans issued under the new scheme could potentially be cheaper than this, we don't yet know for sure.

Over the coming weeks, we'll be looking closely at the finance offered through the Warm Homes Loan Scheme and comparing it with other ways of paying for home improvements.

That means checking the rates, fees, eligibility rules and repayment terms, and seeing how the deals stack up against standard personal loans and other green finance already available.

The promise of loans at rates as low as 0% is eye-catching, but that doesn't necessarily mean every deal offered through the scheme will be the cheapest way to borrow.