Boiler Finance - How Can I Finance a New Boiler?
So, your problematic boiler is on its last legs. After forking out a small fortune on repair bills, you've decided enough is enough, it's time to replace your old energy sapping boiler with a brand new condensing boiler.
If you don't have the budget to replace your boiler outright it can be tempting to turn to the cheaper boilers on the market to cut costs in the short term. However, this can mean you end up spending more on repairs and, if the boiler isn't operating at a high efficiency, higher heating bills in the long run.
Depending on your circumstances, there are several options available to help you benefit from a boiler replacement, we’re going to take you through 3 of the most common methods of paying for a new boiler.
How does boiler finance work?
In order to apply for boiler finance you'll need to apply as you would for any credit agreement. Your personal details will be checked including your credit rating to ensure you can afford to keep up with the monthly repayments.
If your application is successful the lender will pay for the upfront costs of the installation of your new boiler. You will then pay the lender back over a pre-agreed period of time. Some schemes will ask for a deposit towards the boiler while others may not. The interest you will pay back will also vary from provider to provider.
Before signing any contract make sure you've done your research and compared all the options open to you. It will more than likely be a long term agreement and that is not something to be entered into without due consideration.
How much is boiler finance?
The monthly payments you make will vary depending on the amount of money you need to borrow for your new boiler, what period of time you want to make the payments over and the finance provider you choose. One of the most popular searches people make is ‘can I get a boiler replacement at £17 per month?’ and whilst the answer is yes, you really need to dig into the figures to see if the cheapest option is the best one for you, as you can end up paying a lot more for your boiler the longer you are paying it back.
To give you an overview of the kind of figures you could be looking at we've put together a few representative examples. The below table shows the monthly payments* you would make over both a 3 year and a 10 year plan based on a total boiler installation price of £2,246 (interest rate per annum = 12.2%, representative APR = 12.9%).
|Pay Monthly Boilers No Deposit||Pay Monthly Boilers With Deposit|
|Repayment Period||3 years / 36 months||10 years / 120 months||3 years / 36 months||10 years / 120 months|
|Total Loan Amount||£2,246||£2,246||£1,200.75||£1,175.50|
|Total Charge for Credit||£447.16||£1,651.60||£239.25||£864.50|
|Total Amount Repayable||£2,693.16||£3,897.60||£2,485.25||£3,110.50|
|*Please note these figures are representative examples only and are not intended as quotes. All finance options are subject to status and credit checks.|
Buy now, pay later boilers
Some companies will even have new boiler offers such as Buy Now, Pay Later. This means that after making an initial deposit (usually around 10%) your new boiler will be installed but you won't have to pay anything else for another 12 months. After the 12 months (or whatever time period has been agreed) you can either pay the remaining balance in full or pay monthly for a 3, 5 or 10 year period.
Pay monthly boilers
An alternative to straightforward finance is to bundle all your boiler, maintenance, installation and servicing costs up into one easy to manage low fixed monthly payment without any upfront costs.
You don't just get the latest boiler and a Magnaclean complete central heating system flush, this pay monthly scheme means all components and labour are inclusive - so no nasty surprises and some may even throw in a smart thermostat so you can regulate your central heating on the move.
One important thing to remember: with these sort of finance schemes, if you decide to move home you'll still be tied in to making the payments for the length of the finance agreement.
Interest free boiler replacement
There are interest free boiler replacement deals available in some cases, mainly from local heating engineers but you can find that some energy suppliers offer them too. This means that you can spread the cost of a new boiler over a few years with 0% interest.
Who Offers Boiler Finance?
Nowadays many companies will offer some kind of boiler finance arrangements including:
- Heating installers
- Boiler manufacturers
- Energy providers
There are multiple arrangements when looking into payments from 0% boiler finance, boiler replacement loans to boiler rental schemes.
Boiler finance with bad credit rating
If you have a bad credit rating, don’t let that put you off looking into the possibility of getting a new boiler on finance. There are some companies who make boiler finance available to anyone with poor credit, although you might need to pay a deposit upfront or have a higher interest rate on the monthly payments. Should you not be able to get boiler finance due to your credit rating, then you might need to pay cash upfront for your new boiler if possible.
3 ways to finance your new boiler
1. Boiler finance deals
If you don't have the financial means to purchase a boiler replacement upfront, there's always the option of purchasing a boiler on finance. This is also known as paying for a boiler by installments so you can spread the cost over a period of time to suit your budget. After all, when it comes to expensive purchases, for many people buying something on finance isn't just an option; it's the only option, particularly when money is very tight.
And boilers are no exception. And the good news is that there are new boiler offers available. In some cases, it may be possible to find interest free boiler finance, but some may involve high interest rates so make sure you always read the small print! By paying for a boiler through monthly instalments you can add it to the budget for all your other commitments like utility bills, food or mortgage payments.
2. Home improvement loan
A home improvement loan is an ideal solution for homeowners looking to make their home a more comfortable place to live while also potentially increasing the value of their home. It’s possible to take out a loan of up to £15,000 that you can return with fixed payments over 1, 3 or 5 years. The shorter the timescale, the less interest you’ll have to pay on the original loan.
3. Pay with cash
If you can afford to pay for a new boiler outright, then you can pay in full with one lump sum. Taking out finance, paying in installments or a pay monthly plan means you'll pay more overall for it in the end. However, the average cost of boiler replacement is around £2,500 so it's certainly not cheap and the prospect of paying for a new boiler in one lump sum isn't an option for everyone.
You may choose to raid your savings or offload the cost onto a personal credit card but, as we're sure you're aware, charges will apply if you don't pay it off!
Is a Boiler on Finance Right For You?
A boiler on finance is a great option for many householders for several reasons:
- No need for a large upfront payment – spread the cost through affordable monthly installments
- Quick access to a new, more efficient, safer boiler from top manufacturers
- Lower your home's carbon emissions
- Save money through cheaper energy bills
A few things to consider…
- Make sure you can comfortably afford to keep up with the monthly repayments as missing payments will adversely affect your credit rating
- The finance agreement you are offered will be based on your credit rating; those with a lower credit rating may receive higher interest rates
- There are a huge number of different finance deals on the market so make sure you've done your research and have found the best deal for your circumstances
However, buying a boiler on finance may not be the best choice if you:
- Can afford to pay for the cost of a new boiler installation upfront. You will own the boiler outright and won't be tied into long term financial contract that will continue even if you move home. Plus, boiler finance arrangements will mean you pay a higher price for the boiler overall.
- Are eligible for the government's free boiler grants scheme. This scheme provides funding to enable low income households to improve the energy efficiency of their home and lower their heating bills. If you qualify you could have a brand new boiler installed completely free of charge or at a significantly lower cost.