Upgrading to a heat pump, without breaking the bank

Upgrading to a heat pump, without breaking the bank

We need a new way to pay for our new heating systems

There’s huge variation in the cost of getting a heat pump. A few lucky homes can “plug in” the external heat pump unit to the existing pipework, radiators and water cylinder for a low-cost install. Most of us, however, need bespoke changes to what’s a hodgepodge of randomly assembled heating equipment items in our home that were never designed to work together as a unit. Whether you brand it “the cost of getting a heat pump” or “the cost of fixing decades of heating system disorder”, the fact remains that someone has to pay for it.

While it varies considerably across different types of properties, the average air source heat pump system costs £13,590 according to the Government’s latest data. This is probably even a slight underestimate, as quotes don’t always include electrical works that can be required. The good news is that homeowners can currently benefit from the £7,500 Boiler Upgrade Scheme (BUS) grant, which delivers an average net installation cost of around £6,000. 

What are you really paying for?

Before getting into the different ways to pay for your heat pump, it’s worth addressing the question of why you might decide to get one in the first place, as this is essential framing for thinking about how much you want to spend, and how. 

The most common terms you may have heard (and are likely familiar with) is whether it is a good “investment” and how long your “payback” on bills might be. These are valid questions, but they are notoriously difficult to answer for two reasons; there is an endless list of other ‘investments’ you could make with this money, and it’s nearly impossible to accurately predict bill savings on something designed to last for 15 years. The consensus is you will likely experience modest energy bill savings from day one, and that savings will likely increase over time as electricity prices fall relative to gas, but that’s about as far as you can go.

What most people overlook is the factor that will impact their daily lives the most – the benefit they will experience from having a premium, clean heating system. One that keeps your house at a pleasant warmth year-round (avoiding the temperature whipsaws associated with traditional boilers), keeps the air in your home clean with no carbon monoxide risk, and gives you the satisfaction that you have just made the most impactful single decarbonisation contribution that you are likely to make in your lifetime. Plus, it’s just nice to have some cutting edge technology!

We say this because people rarely think about other major home improvements – that new kitchen for example – in terms of ‘payback’. It’s all about how much you enjoy it, and how it makes you feel. So as we delve into some of the options for how you could purchase a heat pump, hold in your mind how much better you might feel having a state-of-the art, super-efficient smart heat pump instead of your analogue boiler humming away in your cupboard somewhere.

The traditional approach to home upgrades

So, as we established above, for your average heat pump installation you are looking around £6,000. The ‘traditional’ approach is of course to pay for this in lump sums, typically ⅓ as a deposit upon booking, ⅓ a week or two in advance of your scheduled installation date, and the final ⅓ upon commissioning of the system. Some installers do vary the split, but payment is broadly made in three staggered instalments. 

You also will need to factor in annual servicing over time, which is an essential part of keeping heat pumps at their best, and your bills at their lowest. It’s also key to having a long, happy heat pump life with no surprises. This will likely cost around £200-£300 per year.

So you’ve paid in full by the time your system is up and running, and you start benefiting day-by-day from your shiny new heat pump system. The air you are breathing is a little cleaner. Your energy bills are likely a little lower. You’re not having debates over whether the heating is on or off. And your bank balance is £6,000 less than before.

Sometimes, saying yes today is better than tomorrow

OK, but it’s still a lot of money. Not everyone has £6,000 sitting around, and if they do maybe they’d rather warm themselves up with a winter holiday in the sun? Also, when purchasing something that’s costly but is going to give you value over many years, it can make sense to spread the payments out over a longer timeframe too. That way you’re paying as you benefit, rather than all in advance.

That’s why there’s a place for financing products that help homeowners upgrade their heating system today, particularly if it’s a case where the alternative might be waiting several years, not upgrading at all or choosing something with fewer benefits – such as a replacement boiler. With heat pumps, this is doubly important due to the massive carbon saving associated with the switch, and the time-limited £7,500 boiler upgrade scheme (BUS) grant. You won’t want to miss out on that grant, just because you don’t have the balance of £6k sitting in your bank account today.

Personal loans

So you’ve found an installer that you trust, have a quote you are happy with and have cleared any other hurdles that might have been in your path – such as planning. If you would rather not put a dent in your bank balance, you could look at a personal loan to finance your home heating upgrade. A wide range of these exist, and many people end up with their current account or mortgage provider for simplicity.

The loan is a general one, rather than being linked to your heating system. This means that should anything go wrong and require repairs, or should you move home, you will still be liable to pay off the loan. You will also still need to pay for annual servicing. However you will be able to have all the same benefits as an upfront purchase, while still having that rainy day (or sunny holiday!) fund.

The heat pump subscription

Specialist tools exist for a reason; for the job they are designed for, nothing else is quite as good. This is why we created the UK’s first pay-monthly subscription for heat pumps systems: the Fornax ‘Snugscription’

Designed to make getting a heat pump as simple as it should be, for a single monthly payment we take care of everything, from your home survey through to a decade-plus of happy, carefree ownership. This includes design, help with any planning applications, expert installation, regular servicing and a breakdown guarantee, so if you’re unlucky enough to experience any issues, we will put it right swiftly and at no cost. We also make sure that you have flexibility where it matters; if you sell your home, you are able to end your agreement or transfer it to the new owner with minimal fuss.

We believe that for many homeowners, this solution offers the best of all worlds. Feel the benefit of a state-of-the-art heating system today (including benefiting from the Boiler Upgrade Scheme grant), without the project hassle or upfront cost, fully serviced and guaranteed, safe in the knowledge that everything is covered in a single monthly payment. We think that’s an offer worth considering!

Whatever you do, work with experts

Whichever way you choose to fund your installation, the golden rule of heat pumps is to make sure you work with a qualified, experienced engineer who can design an appropriate system and install it well. Otherwise you risk missing out on the benefits and guilt-free heating that come with this marvel of modern engineering. Whether it’s working with our own installer team or partnering with installers our customers have already found themselves, we never compromise on that and neither should you!

This article was written and contributed by Fornax, a British company dedicated to helping homeowners transition to low carbon heating. Their Snugscription has been developed with the support of the Department of Energy Security & Net Zero’s Heat Pump Ready programme. If you’re interested in learning more about getting a heat pump, please give Fornax a call on 020 4571 0213 or visit fornax.energy.

Fornax Energy Ltd is an Appointed Representative of Product Partnerships Limited which is authorised and regulated by the Financial Conduct Authority. Product Partnerships Limited FCA registration number is 626349 and its address is Suite D2 Joseph’s Well, Hanover Walk, Leeds LS3 1AB. Fornax offers both regulated consumer hire and unregulated 0% interest credit agreements. All finance subject to status, terms and conditions apply.

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