Heat pump grants and green mortgages are two separate schemes that work best used together, in a specific order. This guide covers the Boiler Upgrade Scheme's major April 2026 overhaul, how green mortgages actually reward an improved EPC rating, the sequencing that captures both benefits, and where new-build heating is heading under the Future Homes Standard.
Figures below reflect GOV.UK, Ofgem, and published 2026 lender guidance, current to mid-2026, with the Bank of England base rate at 3.75%. This is general information, not financial advice; grant values, lender products, and rates change, so check current terms before committing.
1. The Boiler Upgrade Scheme's April 2026 overhaul
The Boiler Upgrade Scheme (BUS) provides upfront capital grants toward heat pump installation in England and Wales, applied through your installer so it reduces what you pay directly rather than requiring a claim afterward. From 28 April 2026, the scheme was substantially overhauled.
| Technology | Grant value |
|---|---|
| Air source or ground source heat pump (standard) | £7,500 |
| Air-to-air heat pump (new from January 2026) | £2,500 |
| Oil or LPG homes (temporary uplift, 21 July 2026 to 31 March 2027) | £9,000 |
| Biomass boiler | £5,000 |
Air-to-air heat pumps, which blow warm or cool air directly into rooms rather than requiring a wet central heating system, opened the scheme for the first time to flats and homes without existing radiators or underfloor heating, a segment previously locked out almost entirely. Separately, and arguably more significant, the EPC insulation condition was removed entirely from April 2026: previously, an EPC recommending outstanding loft or cavity wall insulation could block an application altogether, a barrier that disproportionately affected older, less efficient homes, precisely the properties the scheme is meant to help.
Hybrid systems that keep a gas or oil boiler running as a backup or secondary heat source are disqualified from the scheme. The heat pump has to be the primary and effectively sole heating system for the grant to apply.
Scotland operates a separate scheme, Home Energy Scotland, offering both a grant and an interest-free loan of up to £7,500 each, which can be combined, a genuinely more generous structure than the grant-only BUS in England and Wales.
2. The Warm Homes Plan's £2bn loan scheme
Published in January 2026, the Warm Homes Plan sets aside £15 billion of funding through 2030, aiming to upgrade 5 million homes and support 1 million families with clean, affordable heating. Alongside expanded Boiler Upgrade Scheme funding, it includes a new £2 billion low and zero-interest loan scheme intended to help households fund solar panels, home batteries, insulation, and heat pumps together.
Interest rates, loan terms, and the precise application process for the Warm Homes Plan's loan scheme were still awaiting confirmation later in 2026 at the time of writing. Check GOV.UK directly for the current position before assuming this route is available or budgeting around it; in the meantime, some lenders offer their own interest-free installer finance to bridge the gap.
3. How green mortgages actually work
A green mortgage rewards a property's existing energy efficiency, typically requiring an EPC rating of A or B (a SAP score of 81 or above) to qualify, through either a lower interest rate or a cashback payment. The market has grown substantially, from just four green mortgage products across the UK in 2019 to around 61 by 2024, and most major lenders now offer at least one.
| Lender approach | How it typically works |
|---|---|
| Rate-discount lenders | A lower interest rate, commonly 0.10% to 0.25%, for properties rated A or B |
| Cashback lenders | A one-off payment, commonly £250 to £2,000, for qualifying properties or completed green improvements |
| Interest-free additional borrowing | Some lenders let existing customers borrow a set amount, commonly £5,000 to £20,000, at 0% interest for a fixed period specifically for green home improvements, regardless of current EPC rating |
| Responsive, band-based discounts | A small number of lenders offer a discount that scales with each EPC band improvement achieved, rewarding deeper retrofits more directly |
The rate discount itself is often modest in isolation, but compounds meaningfully over a mortgage term, and sits on top of whatever grant funding was used for the underlying installation.
4. The sequencing that captures both benefits
- Install the retrofit measures first, using the best available capital, the Boiler Upgrade Scheme grant, the Warm Homes Local Grant for lower-income households, a lender's own 0% green borrowing product, or private funds.
- Commission a new EPC assessment once the work is complete, to formally document the improved rating.
- Use that improved EPC to access a green mortgage product at your next remortgage date, rather than remortgaging first and hoping the rating catches up afterward.
With roughly 1.8 million fixed-rate mortgages maturing in 2026, the sequencing question is immediate for a large number of homeowners: installing a heat pump or solar panels, and getting a new EPC issued, before your current deal expires can be the difference between a standard market rate around 5.68% and a green rate closer to 4.06% on an otherwise comparable five-year fix. Remortgaging before the EPC reflects the improvement simply won't unlock the better rate, regardless of the work actually completed.
5. The Future Homes Standard: where new-build heating is heading
The Future Homes Standard is a major update to England's Building Regulations, aiming to cut carbon emissions from new homes by 75% to 80% compared with the 2013 standard, primarily by mandating low-carbon heating and improved insulation and airtightness rather than gas boilers. Under the standard, hybrid and hydrogen-ready boilers are not permitted; new homes will instead use air source or ground source heat pumps as the primary heating system, a genuinely fundamental shift for the housebuilding sector. A separate requirement (Requirement L3, adopted in the March 2026 Building Regulations revisions) makes on-site renewable generation, typically solar PV, a functional requirement for new homes as well.
Reported implementation dates have varied across sources at the time of writing, with some citing initial implementation from March 2027 and full mandatory rollout across all new homes by March 2028. Government has also confirmed the Home Energy Model (HEM), a new compliance methodology replacing the older SAP calculation, will underpin how compliance is demonstrated. Given the moving parts still being finalised, check GOV.UK directly for the current confirmed timeline rather than relying on either date here if this affects a specific development or purchase decision.
6. Frequently asked questions
How much is the Boiler Upgrade Scheme grant worth in 2026?
£7,500 for a standard air source or ground source heat pump. Following an overhaul from 28 April 2026, a £2,500 grant was added for air-to-air heat pumps, and homes currently heated by oil or LPG can claim an increased £9,000 grant between 21 July 2026 and 31 March 2027.
Do I need a good EPC rating to get a Boiler Upgrade Scheme grant?
No, not any more. Previously, an EPC recommending outstanding loft or cavity wall insulation could block an application; this condition was removed entirely from April 2026, removing what had been a significant barrier for older, less efficient homes.
What EPC rating do I need to qualify for a green mortgage?
Most green mortgage rate discounts and cashback rewards require an EPC rating of A or B, corresponding to a SAP score of 81 or above. Products vary by lender, some offer a rate discount, others cashback, and a small number offer interest-free additional borrowing regardless of current rating.
In what order should I install a heat pump and remortgage to a green rate?
Generally: install the retrofit measures first using the best available grant or finance, commission a new EPC assessment to document the improved rating, then use that improved EPC to access a green mortgage product at your next remortgage date. Attempting to remortgage before the EPC reflects the improvement won't unlock the better rate.
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