Green Deal launches to help insulate homes

Under the Government's Green Deal, households will be able to get insulation, draught-proofing, double glazing and more installed using a loan, and repay the money in instalments via their electricity bill.

Homes in Scotland will qualify from 25 February, while homes in Northern Ireland will not be able to take part.

As full interest rates have not yet been announced this story just covers the basics. After rates are announced, we will provide a full assessment of the plan in our weekly email. Also see Government Minister Greg Barker's guest comment on the Green Deal for more information.

How does the Green Deal work?

To get energy efficiency measures installed under the Green Deal, you first have to have your property assessed – which you may have to pay for – to find out what improvements can be made and how much you could save on energy.

Households have been able to have assessments since October.

If you go ahead, a Green Deal provider, such as British Gas and Npower, will provide a loan which can cover all or part of the cost. It will also arrange the installation.

The Energy Saving Trust estimates it typically costs up to £350 to install cavity wall insulation, based on a three-bedroom house.

The Government has also put aside up to £125 million, which is available on a first come, first serve basis as cashback for some homes in England and Wales. Scotland is also running its own, slightly different cashback scheme.

What is the interest rate on the loan?

Market-wide interest rates haven't been announced yet. These will be set by individual providers, so may differ.

The Department for Energy and Climate Change says it believes rates will be about 7%, though some firms have already said they will charge up to 10%.

How do I pay the money back?

You pay back the loan based on your expected savings from using less energy. If it's assessed that average savings for your home would be £10 each month, you'll pay £10 a month back. This helps determine the length of the loan.

However, if you don't make these savings you still have to pay that same sum back.

You don't actually make payments direct from your bank account. Instead, you pay via your electricity bill.

While you can pay off your Green Deal early, you might be charged a fee.

What if I move home?

If someone moves into your home, they pay, as the Green Deal stays with the property.