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What if I can’t afford a new boiler?
A new boiler or central heating system is a big investment which can quickly burn a hole into your finances, especially if your old one breaks down unexpectedly. But there is help available. As well as a range of grants and special offers from the Government and energy providers themselves, you can also look into getting finance from your energy supplier, or taking out a low-rate loan or credit card.
Grants
New boilers are not only expensive; they’re also more efficient and environmentally friendly. Because of this, the Government is keen to encourage replacements and offer incentives to people who would otherwise struggle to pay for a replacement.
Warm Front (see useful links) offers grants to people who own their own home or rent from a private landlord. If you qualify for one of the Government-funded grants you can receive a package of heating and insulation improvements up to the value of £2,700 for a gas system or up to £4,000 for an oil heating system.
Warm Front grants are only available to people on relevant benefits, but for those who don’t qualify, but are over 60, there’s also a rebate scheme worth £300.
Customers can apply for Warm Front Grants or the Heating Rebate Scheme at www.WarmFront.co.uk or by calling 0800 316 2805.
The Energy Saving Trust (see useful links) supplies a list of all other offers and grants available from independent home insulation companies, energy suppliers and local authorities. A simple post code search will produce a list of each subsidy available in your area - many of which offer extra discounts to people on qualifying benefits.
Energy supplier finance
Most of the big energy suppliers that offer boiler installation will also offer finance options too. However, these are very expensive - with APR of around 30 per cent on most.
For example, Flexible Finance from British Gas (www.BritishGas.co.uk) allows you to spread the cost of your new boiler, but charges 29.9 per cent APR.
If you do have savings that could cover the cost instead, you’d be much better off using that money. Even if your savings are in a high-interest account, you’ll probably be making no more than around six or seven per cent on it and you’ll end up paying far more to British Gas at 29.9 per cent than you would make off these savings.
Slightly better, but still not worth going for, is the similar offer from Npower (www.Npower.com). Customers still pay a very high rate of interest at 29.8 per cent APR, but do get six months interest free.
You should only ever go for finance at this rate if you’ll definitely be able to pay the full balance off at the end of the interest free period, otherwise you could end up paying it off over four years at a huge extra cost. While just under £18 a week might seem affordable and fair, after the 10 per cent deposit you’ll end up paying a total of £3,673 for only £2,200 worth of work at this rate.
Rather than taking finance from your supplier or installer, you’d be much better off going for a low-rate loan or paying for it on a credit card with a zero per cent purchases or a low life-of-balance offer instead.
Low rate loans and credit cards
Taking out a low rate loan or transferring the cost of your new boiler to a lifetime balance credit card or low-rate loan could get you an interest rate as low as six per cent.
Transferring a boiler cost of £2,200 to a lifetime balance credit card and paying it off at the same monthly rate as the Npower offer of £76.53 would cost you a total of £2,432 over only 36 months at 6.8 per cent (not including a possible transfer fee), compared to a total of £3,673.44 over 48 months with Npower.
Make sure you apply for any grants that you might be eligible for, and do contact the Energy Saving Trust or Warm Front even if you don’t think you qualify - not doing so could cost you dearly.
If you do have to take out finance to pay for the cost of your boiler or new heating system, try to avoid supplier finance. It is massively overpriced and an extra ten minutes to apply for cheaper credit could save you more than £1,000.
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