From Plans to Reality: How Ethical Lending Can Fund Your Retrofit

How can a one-stop-shop approach help you fund your retrofit?

How are you financing your retrofit? It’s one of the first questions we ask and homeowners list a range of options including savings, inheritance or remortgaging. This means for many that retrofit scope is limited to accommodate a particular pot of money - borrowing additional funds can seem intimidating, complex or just ‘not for them’.

But what if your finance options were seamlessly integrated into the retrofit process and not a frustration that added time and complexity when you wanted to alter your scope but didn’t have the budget flexibility to do so?

Credit Unions are ethical, locally based savings and lending co-operatives and we’ve been working with South Manchester Credit Union to help provide low-cost, flexible loans that work with our services. Read on to find out more.

Finance - the barrier to retrofit?

The upfront cost of retrofit improvements can be a significant hurdle. The average cost of a full retrofit on a terraced home is around £35,000, according to research by the Architects' Journal and property consultant LJJ. And depending on the scope of work, that number can climb higher.

With grant funding opportunities limited and difficult to access, many homeowners feel stuck. Our work with the Green Homes Finance Accelerator (GHFA), a government initiative, has sought to tackle this.

Research we carried out with clients and members as part of this work found that finance isn’t just about affordability—it’s about trust and accessibility. Many clients told us that they felt uncertain about taking out a loan without knowing exactly what they wanted to achieve, what order to complete the work, and the final total cost of work. It wasn’t that clients were totally against borrowing, it was that the wrap-around support wasn’t tied closely enough to the borrowing decision making.

Clients felt that applying for loans was ‘too much of a faff’, or a ‘headache’ to deal with when they're already working through the complexities of retrofit. There was also a distrust, or dislike of conventional financial institutions - with many of our clients preferring to work with more ‘ethical’ sources of funding.

So while research has suggested that homeowners are reluctant to borrow for retrofit, we found attitudes are slightly more nuanced.

A ‘one stop shop’ should include finance

Everyone uses their home differently and tailored advice is always needed which is why we offer services to enable homeowners to decide, plan and deliver the retrofit they want. Our research suggests that a One Stop Shop should therefore wrap around finance, to support clients to make the best possible decisions.

Credit unions align closely with our values and commitment to community - like us, they offer fair and ethical services designed by and for their customers and members, and investing back into the local economy. So we decided to work with South Manchester Credit Union to pilot a retrofit loan - they operate close to where most of our clients are, and can provide a people-focused lending process that looks at a householder’s circumstances and ambitions before making a lending decision.

But what makes credit unions different?

Fair, Affordable Loans – Interest rates are capped, meaning no spiralling borrowing costs.
Flexible and Personal – Unlike high street banks, credit unions consider individual circumstances, making lending decisions that are people-focused .
Community-Owned and Ethical – Members are shareholders, ensuring that money stays within the local economy and works for the benefit of people.
Not-for-Profit – Instead of maximising profit, credit unions reinvest in their members and community.

We’re combining our knowledge and expertise in retrofit with South Manchester Credit Union’s lending processes and commitment to developing products and services for local communities.

Who is the loan for (it might actually be you!)

If you’re considering retrofitting your home, you may already be on your way to saving up a budget, or considering how your savings might work best for you. Borrowing might not be at the top of your list.

However, talking to clients, we found that an option to borrow could be effective in a variety of scenarios. For example:

Anna wanted to both improve her home’s insulation and eventually get a heat pump. She only had enough savings to complete the early repair works and insulation, and instead planned to save for a heat pump at a later date. Borrowing from the credit union made sense to her - it meant she could speed up her retrofit, minimise disruption to her family and make her home more comfortable more quickly.
After receiving some inheritance, Mo wanted to futureproof his family home. He wanted a high quality retrofit that would keep his family comfortable and warm for many years to come, but the inheritance funds didn’t quite stretch to the high standards of materials and fit he wanted. Borrowing meant that he could achieve the quality he expected for his home.
Sal had already completed some retrofit work on their home, but had struggled to save enough to continue with their project. A loan with the credit union meant an opportunity to restart the project quicker, whilst also being a more community-focused lending option, which was important to Sal and their family.

Interested? Here’s how it works

We recommend talking to us about your loan after you’ve had a home retrofit planner survey. This allows the credit union to assess your plans and understand more about what you’re loan will allow you to do.