The average heat pump installation costs between £7,000 and £13,000
If you are considering replacing your gas boiler with a heat pump, the upfront cost is likely the first question on your mind. The installed price for an air-source heat pump (ASHP) in a typical three-bedroom semi-detached home ranges from £7,000 to £13,000, depending on the system size and whether you need new radiators or a hot water cylinder (Energy Saving Trust, 2026). That is a significant sum, but the majority of homeowners do not pay the full amount.
The direct answer is that after the £7,500 Boiler Upgrade Scheme (BUS) grant, your out-of-pocket cost is typically between £0 and £5,500. The BUS is a government grant that reduces the price at the point of sale, meaning the installer deducts it from your invoice before you pay anything (GOV.UK, 2026). For a smaller property with a simple installation, the total cost after the grant can be close to zero. For a larger home requiring more extensive work, you might still owe several thousand pounds.
0% credit options are available through the Boiler Upgrade Scheme and partner finance packages
The BUS grant itself is not a loan and does not need to be repaid. It is a flat discount applied by your MCS-certified installer, who then reclaims the money from the government. However, if the remaining balance after the grant is still more than you can pay upfront, several installer chains and energy suppliers offer 0% APR credit for the balance.
These 0% finance deals are typically available for 12 to 24 months and are capped at amounts between £5,000 and £7,000. Most require a minimum deposit of 10% to 20% of the remaining cost (Ofgem, 2026). You cannot use 0% credit for the grant-eligible portion of the installation, only for the balance you would otherwise pay directly. Check with your installer whether they are a registered finance partner before you sign the contract.
Quick numbers grant amounts, loan rates, and typical monthly payments
| Finance Option | Amount Available | Interest Rate (APR) | Typical Term | Monthly Payment (on £5,000 borrowed) |
|---|---|---|---|---|
| Boiler Upgrade Scheme grant | £7,500 | 0% (grant, not loan) | None (one-off) | £0 |
| 0% credit from installer | Up to £5,000 | 0% | 12–24 months | £208–£417 |
| Low-rate green loan from high-street bank | £3,000–£15,000 | 3.5%–6.9% | 3–7 years | £68–£155 |
| ECO4 flex funding (income-qualifying) | Full or partial cost | 0% (subsidy) | None (one-off) | £0 |
The figures above are based on current rates from Ofgem, MoneySavingExpert, and the GOV.UK ECO4 page (GOV.UK, 2026). Monthly payments for bank loans assume a five-year term at the midpoint APR of 5.2%.
Who qualifies for the £7,500 Boiler Upgrade Scheme grant
To get the BUS grant, you must own the property and have a valid Energy Performance Certificate (EPC) with no outstanding recommendations for cavity wall or loft insulation (GOV.UK, 2026). The property must be in England or Wales; the scheme is not available in Scotland or Northern Ireland. You cannot have previously received a BUS grant for any heating system at the same property.
The installer must be MCS-certified and registered with Ofgem to claim the grant on your behalf. You cannot apply for the grant yourself and then hire any installer. The grant is applied as a direct discount, so you only pay the installer the net amount after the £7,500 has been deducted.
Heat pump finance options for homeowners who do not qualify for a grant
If you are ineligible for the BUS, for example, because you live in Scotland, you are a landlord, or the property already received a grant, you still have several finance options. 0% credit from installers is still available, but it applies to the full installation cost rather than just the balance after a grant.
High-street banks including Barclays, NatWest, and Lloyds offer unsecured “green home improvement” loans from £3,000 to £15,000 at 3.5% to 6.9% APR, with no early repayment penalty (MoneySavingExpert, 2026). For low-income households, the Energy Company Obligation (ECO4) provides full or partial funding for heat pumps, but only if you receive certain means-tested benefits (GOV.UK, 2026).
The Scottish Government’s Home Energy Scotland loan offers up to £7,500 at 0% for heat pumps, repayable over five years. This is not a grant but an interest-free loan, so you must repay the full amount over time (Home Energy Scotland, 2026).
How to verify an installer to ensure grant and finance eligibility
Every heat pump installation claiming a BUS grant or 0% finance must be carried out by a company certified by the Microgeneration Certification Scheme (MCS). You can check the MCS Installer Directory online to confirm the installer’s certification is current and covers heat pumps (MCS, 2026).
The installer must also be registered with TrustMark for consumer protection. You can verify this on the TrustMark website. If your property uses gas, the installer must be Gas Safe Registered for any gas-related work, such as connecting to the existing gas supply (Gas Safe Register, 2026).
Do not accept a quote from an installer who cannot provide current MCS and TrustMark certification. If you do, you will lose the BUS grant and any 0% finance offers tied to it.
The direct answer the cheapest heat pump finance option in the UK is the Boiler Upgrade Scheme grant, followed by 0% installer credit
For most homeowners, the cheapest route is the £7,500 BUS grant, which leaves a remaining cost of £0 to £5,500. If you cannot pay the balance upfront, 0% credit from an MCS installer for 12 to 24 months is the next lowest-cost option, because you pay no interest at all.
For those who need longer terms, a low-rate bank green loan at 3.5% to 6.9% APR is cheaper than a credit card or an unsecured personal loan from a non-specialist lender. Always compare the total cost of credit, not just the monthly payment, and check for hidden fees such as early repayment charges (GOV.UK, 2026). Compare heat pump running costs vs gas boiler How to find an MCS certified heat pump installer
Frequently Asked Questions
After the £7,500 Boiler Upgrade Scheme grant, your out-of-pocket cost is typically between £0 and £5,500, according to GOV.UK. The exact amount depends on your home size and installation complexity.
No, the Boiler Upgrade Scheme is a grant, not a loan, and does not need to be repaid. It is deducted from your invoice by your MCS-certified installer, who reclaims the money from the government.
Yes, 0% APR credit is available for 12 to 24 months on the remaining balance after the grant, typically capped at £5,000 to £7,000. A minimum deposit of 10-20% is usually required, per Ofgem.
Not necessarily. After the £7,500 Boiler Upgrade Scheme grant, you can use 0% credit for the balance, spreading payments over 12-24 months. Some installers also offer longer-term finance options.
The installed price for an air-source heat pump in a typical three-bedroom semi-detached home ranges from £7,000 to £13,000, according to the Energy Saving Trust. Costs vary with system size and additional work like new radiators.
