Your Guide to Home Improvement Financing

If you’ve seen offers for home improvements, you might be wondering what the best option is for you and where to start. The truth is that many home improvement installers in the UK offer flexible payment terms, allowing homeowners to spread the cost of their solar setup over time, just like you might with a new boiler or kitchen.

In this article, we explain how home improvement finance works, how monthly payments are calculated and the types of finance available. While we don’t provide financial advice, this guide aims to give a general overview of how the numbers stack up and what to consider before choosing finance.

How Does Home Improvement Finance Work?

Finance for home improvements allows you to spread the cost of renovations and upgrades, rather than paying the full amount upfront. 

It’s often used for large projects like installing solar panels, replacing windows, upgrading heating systems and more.

Here’s how the process typically works:

1. Get a Quote: You choose the improvement or installation and get a cost estimate.

2. Check Finance Availability: Some home improvement providers offer finance directly or via a partner lender, while others expect you to arrange it yourself.

3. Apply for Finance: You’ll complete an application (usually online or through the provider) where the lender assesses your credit profile and affordability.

4. Receive Terms: If approved, you’ll be offered a repayment plan, typically monthly instalments over a fixed period, with interest if applicable.

5. Repay Over Time: Payments are usually fixed and predictable. Early repayment options may also be available but check for any fees.

Types of Finance Available 

When it comes to financing your home improvements, you typically have two options: arranging finance directly through the retailer or securing it via a specialist finance company. 

Many home improvement providers offer finance at the point of sale, often in partnership with a regulated lender, allowing you to spread the cost with monthly payments. Alternatively, you can choose to go directly to a finance provider yourself, which may give you more control over the terms and lender you use. 

Both routes can make your project more affordable, so it’s worth exploring what suits your budget best.

How Monthly Payments Are Calculated

Whether you get finance directly from the lender or via the retailer’s finance partners, installers typically offer finance options through personal loans, either in-house or via third-party lenders. The repayments are calculated based on:

• The term - usually running between 10 to 25 years

• Interest (APR) - often between 2% and 10%, depending on your credit score and interest rates*

• Initial deposit

Example: £40 per month for a typical home.

*Please note, these figures may vary depending on various factors. We cannot provide advice, and these figures are for general information purposes only. 

Let’s take a common scenario:

• System size: 3.2 kWp (approx 8 panels)

• Total cost: £6,000

• Loan term: 20 years

• Interest rate: 5.5%

  
  

Monthly repayments work out at around £39.82, making the “from £40” claim representative of smaller systems designed for typical three-bed semi-detached homes with average energy use.*

*Please note, these figures may vary depending on various factors. We cannot provide advice, and these figures are for general information purposes only. 

So, What Makes Up the Cost?

Let’s take a look at a solar panel installation and what is typically included in the cost:

• Solar panels (depending on your roof and energy usage)

• Inverter (essential to convert solar energy into usable electricity)

• Optional battery storage (stores excess electricity for use at night)

• Mounting hardware and scaffolding

• Electrical work and installation labour

• Monitoring systems and smart meters

• VAT (currently 0% for most residential systems under UK government incentives)

For smaller homes, a panels-only system (around 3-4 kWp) might cost in the region of £5,000 - £7,000. Larger homes or systems with batteries may come in at around £10,000 - £14,000.

How to get finance for home improvements 

While the process for finance for home improvements is often straightforward, whether you’re approved (and on what terms) depends on a few key factors:

1. Credit Score - Your credit score gives lenders a sense of how reliably you’ve repaid credit in the past. The higher your score, the better your chances—and the more competitive the interest rate.

2. Income & Employment Status - You’ll usually need to show consistent income, whether you’re employed full-time, self-employed, or retired. Some lenders may ask for payslips, bank statements, or tax returns.

3. Existing Debts & Outgoings - Brokers consider your debt-to-income ratio (how much you owe vs how much you earn). If you already have significant monthly commitments, it could affect your eligibility.

4. Loan Amount & Term - Brokers assess how much you want to borrow and for how long. Higher amounts over longer terms may require stronger creditworthiness or even security (e.g. a homeowner loan).

5. Purpose of the Loan - You’ll usually be asked to specify what the finance is for; some lenders may only cover certain types of home improvement work, while others are more flexible.

Things to consider before financing

• Total repayment amount vs upfront payment.

• Interest rates and APRs.

• Loan term length and monthly payments.

• Ownership (who owns the system if you’re financing?).

• Eligibility criteria (may vary by provider).

• Maintenance and warranties (depending on who owns the system).

Recognised Finance Brokers Our Solar Providers Partner With

Our partners work with a range of finance providers to help make your purchase more flexible and accessible. The companies listed below are just some of the options that may be available to you, but please note that your experience may differ depending on the partner and the specific finance arrangements they offer.

Vendigo

Vendigo provides a wide breadth of industries, including home improvements and renewables. They’re a credit broker, not a lender, meaning they connect merchants (like solar installers) with accredited lenders.  

Phoenix

Phoenix Financial Consultants specialises in home improvements and consumer finance, including solar, heating, insulation and more. They connect customers and installers with lenders for finance options, including:

• Personal and secured loans

• Home improvement lending

• Point of sale finance via installers

  
  

Hometree

Hometree is a UK energy services firm that offers homeowners a seamless, bundled experience: financing, installing, maintaining, and servicing low-carbon systems such as solar panels, batteries, heat pumps, and boilers.

Its financing arm operates fully regulated, providing point-of-sale finance with zero or low upfront payments, long terms, and built-in servicing. **

**We are not authorised or regulated by the Financial Conduct Authority. This article is for general information purposes only and does not constitute financial advice.

Every Home Is Different

It’s important to note that no two solar installations are the same. Factors like roof size, energy usage, home orientation, and whether or not you add battery storage will all influence the total cost and the monthly payment.

In Summary 

The advertised monthly figure is simply a reflection of three things: What system you install, over how long, and at what interest rate (APR).

It’s a legitimate finance structure used by many UK installers to make home improvements more affordable. Always speak to your installer about what’s included in your quote, and remember: finance is subject to eligibility and terms set by the provider.

Compare and Save on Home Improvements with SpotDif

At SpotDif, our handy comparison tool makes finding top-rated solar panel providers and comparing their offers a breeze.

Start your search for affordable, high-quality solar panels, heat pumps and  today and see how much money you could save

Disclaimer

We are not authorised or regulated by the Financial Conduct Authority. This article is for general information purposes only and does not constitute financial advice.