If you bought a new build home using a Help to Buy equity loan between 2013 and 2023, you are one of several hundred thousand homeowners across England now working out what repayment actually costs. The scheme closed to new applicants in March 2023, but the loans themselves run for up to 25 years — which means a large wave of borrowers are now past their five-year interest-free window and starting to feel the numbers bite.
The single biggest source of confusion is this: you don't repay the amount you originally borrowed — you repay a percentage of your home's current market value. If your property has gone up in value since you bought it, the loan gets more expensive to clear. If it has fallen, it gets cheaper. This one feature of the scheme catches out more homeowners than the interest charges themselves.
This guide sets out, in plain terms and with worked examples, exactly how the interest schedule works, how valuations are done, what triggers repayment, what staircasing really costs, and how to budget whether you're planning to sell, remortgage, or simply pay down the loan over time. As with all Help to Buy figures, treat the percentages and thresholds below as typical of the scheme rules — always check your own equity loan mortgage offer and the current terms published by your Help to Buy agent, since exact rates and fees can vary by cohort (2013–2021 scheme vs the 2021–2023 scheme) and have been updated over time.
If you're also managing other post-purchase costs, it's worth reading alongside our guides on financial planning after buying your new build home and how to calculate the true monthly costs of a new build, since your equity loan interest sits on top of your regular mortgage, service charges and running costs.
How the Help to Buy Equity Loan Actually Works
Before getting into repayment costs, it helps to be clear on the mechanics. When you bought your new build, you typically put down a 5% cash deposit, took out an equity loan from Homes England (or the Welsh Government if you're in Wales) worth 20% of the purchase price (up to 40% in London), and arranged a repayment mortgage for the remaining 75% (or 55% in London) from a participating lender.
The equity loan is secured as a second charge on your property, behind your main mortgage. It is interest-free for the first five years, but not fee-free — you still pay a monthly management fee, typically around £1 per month, from completion.
- Years 1–5: No interest charged. You pay only your main mortgage, the £1 monthly management fee, and normal running costs.
- Year 6 onwards: Interest kicks in, usually starting at 1.75% of the original loan amount in year six.
- Every year after that: The interest rate increases annually, typically by RPI plus 1% or 2% (2013–2021 loans) or CPI plus 2% (loans taken out under the 2021–2023 scheme), so the interest cost tends to rise faster than general inflation.
- Term: The loan runs for up to 25 years or the length of your mortgage term, whichever is relevant, unless you repay it sooner.
Crucially, the interest is calculated on the original cash amount you borrowed — it doesn't rise with house price growth. But when it comes to actually repaying (redeeming) the loan, the amount you owe is recalculated against your home's current market value at that point. These are two entirely separate calculations, and mixing them up is the most common budgeting mistake homeowners make.
Interest is charged on the original loan amount. Repayment is calculated on today's property value. Keeping these two numbers separate in your head is the key to understanding what Help to Buy really costs.
Your annual statement from your Help to Buy agent (or UK Finance-appointed administrator, depending on your region) should show your current interest rate and the cash amount of interest due for that year. If you haven't checked yours recently, it's worth requesting an up-to-date statement now, particularly if you're within a year or two of your fifth anniversary.
Help to Buy Interest Rates: The Schedule Explained
The interest schedule is the part most homeowners underestimate, because the annual increases compound and rates can climb faster than a typical fixed-rate mortgage. Here's a typical schedule for a loan taken out under the 2013–2021 rules, where interest rises by RPI + 1% each year after the initial 1.75%:
| Loan year | What happens | Typical interest rate |
|---|---|---|
| Years 1–5 | Interest-free period | 0% |
| Year 6 | Interest starts | 1.75% |
| Year 7 | First annual increase | 1.75% + RPI + 1% (previous year) |
| Year 8 onward | Increases every year | Previous rate + RPI + 1% (compounding) |
| Year 25 (or mortgage end) | Loan term typically ends | Full balance due if not repaid earlier |
For loans taken out under the 2021–2023 scheme rules, the annual uplift is based on CPI + 2% rather than RPI + 1%, which was intended to track a different (and historically lower, though not always) measure of inflation. Because CPI and RPI diverge — sometimes significantly in high-inflation years — two neighbours who bought similar homes just a couple of years apart, under different scheme cohorts, can end up paying noticeably different interest amounts by year 10.
The interest is charged monthly and added to your mortgage-style payments — most administrators collect it via direct debit alongside the £1 management fee. It's genuinely worth telephoning your Help to Buy agent (or checking your annual statement, which by scheme rules should be issued each year around your loan anniversary) to get your exact current rate rather than estimating from these typical figures, since real-world rates depend on your specific loan start date and the RPI/CPI figures published in the relevant months.
If you're comparing this against other forms of shared-cost homeownership, our guide to how shared ownership costs work on new build homes covers a different but related model where you buy a share of the property outright rather than taking a loan against it.
The Valuation: Why It Determines What You Owe
Whenever you want to staircase (buy back a chunk of the equity loan), remortgage while keeping the loan in place, or sell your home, you first need an independent valuation of your property carried out by a RICS-qualified surveyor. This valuation — not the price you originally paid, and not an online estimate — sets the figure your repayment percentage is applied to.
- The valuation must usually be no older than three months at the point you complete the staircasing or redemption transaction.
- You pay for the valuation yourself, typically a few hundred pounds depending on property size and surveyor.
- If you disagree with the valuation, most Help to Buy agents allow you to challenge it or commission a second opinion, though this adds cost and time.
- If you're selling on the open market, the actual sale price agreed with a buyer is normally used instead of a separate valuation, provided the sale is at arm's length and completes within the required timeframe.
This is where the scheme catches people out. Many homeowners assume that because they borrowed, say, £40,000 (20% of a £200,000 purchase price), they will always owe £40,000. In reality, if the property is now valued at £260,000, 20% of that is £52,000 — an extra £12,000 compared with the original cash loan, purely because of house price growth, with no extra borrowing having taken place.
The equity loan behaves less like a fixed debt and more like the government retaining a genuine 20% (or 40% in London) stake in your home's value — for better or worse, depending on how prices move.
The reverse is also true: if your local market has softened and your home is now worth less than you paid, the percentage owed shrinks too. This is one of the few structural protections built into the scheme, though it's obviously not much comfort if you're also facing a negative-equity-style squeeze on your ability to remortgage or sell at all.
Worked Example: How Much the Loan Costs to Repay
Numbers make this far clearer than percentages alone. Here's a realistic worked example for a homeowner who bought a £220,000 new build outside London in 2018, using a 20% equity loan of £44,000, alongside a 75% mortgage and 5% deposit.
| Scenario | Current property value | 20% equity loan repayment owed | Difference vs original £44,000 |
|---|---|---|---|
| Value unchanged | £220,000 | £44,000 | £0 |
| Modest growth (typical over 8 years) | £280,000 | £56,000 | +£12,000 |
| Strong growth area | £330,000 | £66,000 | +£22,000 |
| Price fall (e.g. new-build premium correction) | £200,000 | £40,000 | −£4,000 |
Notice that in the "strong growth" row, the homeowner owes exactly half as much again as their original loan, despite never having drawn down another penny. This is a completely normal outcome of the scheme's design, not an error or a penalty — but it's rarely explained clearly at the point of sale, which is why it comes as a shock to many owners eight to ten years in.
Now add the interest cost on top. Using the same example, if this owner is in year 8 of the loan (three years of interest so far), a typical cumulative interest bill — even before any repayment of the capital percentage — might sit somewhere in the £1,500–£3,000 range depending on the exact RPI/CPI figures applied each year. That interest is separate from, and in addition to, the capital repayment shown in the table above.
For a full picture of how this interacts with your wider household budget, see our guide on year one budget guide for new build running costs, which covers the other line items that typically sit alongside equity loan interest.
What Triggers Repayment of the Equity Loan?
You don't get to choose to simply stop paying or ignore the loan — certain events require you to either repay it in full or in part. Understanding these triggers helps you plan rather than be caught out.
1. Selling your home
When you sell, the equity loan must be repaid from the sale proceeds before you receive your own share. Your solicitor handles this as part of completion, redeeming the loan directly with your Help to Buy agent using the agreed percentage of the actual sale price.
2. Staircasing (partial or full repayment)
You can choose to buy back some or all of the government's stake at any point, without selling or moving. This requires a RICS valuation, and repayments are typically made in minimum increments — historically 10%, though some more recent scheme variants and regional schemes allow 5% increments (often called "phased staircasing" or a similar name — check with your agent, as this detail has changed since the scheme was introduced).
3. Remortgaging while keeping the loan
You don't have to repay the equity loan just because you're remortgaging your main mortgage. Many owners remortgage their 75%/55% portion onto a new deal while leaving the Help to Buy loan in place — but you'll need your new lender's agreement, and Homes England's consent, since the equity loan is a second charge that must remain properly registered against any new lending arrangement.
4. End of term
The loan and mortgage typically must be repaid in full by year 25, or when your mortgage term ends, whichever is defined in your agreement. Reaching this point without a repayment plan is rare in practice, since most people sell, staircase or refinance well before then, but it's worth knowing it's not indefinite.
5. Breach of terms
Certain actions — for example, letting out the property without permission, since Help to Buy properties must normally be owner-occupied, or making unauthorised structural changes that affect value — can also trigger a requirement to repay or resolve the position with your agent.
Staircasing: Costs, Process and Whether It's Worth It
Staircasing means buying back a percentage of the equity loan in stages, rather than all at once. It's the most common way owners reduce or eliminate their exposure to rising interest and future house price growth, without needing to sell.
The staircasing process typically involves:
- Contacting your Help to Buy agent to request a staircasing pack.
- Commissioning a RICS valuation (you pay for this, typically a few hundred pounds).
- Submitting the valuation to your agent for approval — this is usually valid for three months.
- Arranging the funds — either savings, a remortgage, or additional borrowing on your main mortgage.
- Instructing a solicitor to handle the legal transfer (expect a solicitor's fee on top, similar in scale to other conveyancing work — see our guide on new build solicitor fees and how to budget for a sense of typical ranges).
- Completion — the equity loan percentage reduces (or clears entirely), and your Help to Buy agent confirms the new charge position with the Land Registry.
| Staircasing step | Typical cost | Who pays |
|---|---|---|
| RICS valuation | £250–£600+ (size-dependent) | Homeowner |
| Solicitor/conveyancer fee | £300–£700+ | Homeowner |
| Help to Buy agent admin fee | Often a fixed fee, typically under £200 | Homeowner |
| Remortgage/further advance arrangement fee (if borrowing to fund it) | Varies by lender, often £0–£999 | Homeowner |
Whether staircasing makes financial sense depends heavily on whether you expect your local property values to keep rising. Every year you delay staircasing while prices climb, the cash cost of buying back the same percentage increases. Conversely, if you staircase and prices later fall, you've locked in paying more than you strictly needed to.
Staircasing early, while values are lower, is generally cheaper in cash terms than staircasing later — but only if you have the funds available without taking on unaffordable extra borrowing.
Many owners choose a middle path: staircase a partial amount (say 10%) to reduce ongoing interest charges, rather than waiting to clear the full 20% or 40% in one go.
Remortgaging With an Active Help to Buy Loan
A significant number of owners now reaching the end of their initial fixed-rate mortgage deal are discovering that having a Help to Buy equity loan in place adds extra steps to remortgaging — though it rarely makes it impossible.
Key things to know:
- Not all lenders accept second-charge Help to Buy loans on remortgage. Your options may be narrower than a standard remortgage, so it's worth speaking to a broker experienced with Help to Buy specifically.
- You'll usually need Homes England's (or your regional agent's) consent to change your main mortgage lender or increase your main mortgage borrowing while the equity loan remains in place.
- Loan-to-value calculations include the equity loan. Even though you're not paying interest on it in years 1–5, lenders assess your overall borrowing position including the second charge, which can affect the rates you're offered.
- You can remortgage and staircase at the same time. Some owners choose to increase their main mortgage borrowing specifically to fund a partial or full staircasing payment as part of the same remortgage — this needs careful affordability checking, since you're taking on more mortgage debt to clear the equity loan.
If your existing mortgage deal is ending and you're weighing up whether to staircase as part of the remortgage or leave the equity loan in place a little longer, it's worth running the numbers both ways: compare the cost of a slightly larger mortgage (to fund staircasing) against continuing to pay the rising equity loan interest for another few years. Rate rises on your main mortgage and rising equity loan interest can compound at the same time, so this is a genuine budgeting exercise, not just a paperwork exercise.
For the mortgage side of a related shared-cost scheme, our guide on how shared ownership mortgages work for new build homes is useful background, even though the mechanics differ from Help to Buy's equity loan structure.
Selling a Help to Buy Home: How the Loan Gets Repaid
Selling is the most common way owners finally clear their equity loan, and the process is more straightforward than staircasing because you don't usually need a separate RICS valuation — the agreed sale price does the job.
The typical sequence:
- You market and agree a sale price with a buyer in the normal way.
- Your solicitor notifies your Help to Buy agent of the sale, providing the agreed price and a redemption statement request.
- The agent confirms the amount owed: your equity loan percentage (20% or 40%) of the agreed sale price, plus any outstanding interest and fees for the period.
- At completion, your solicitor pays the equity loan redemption amount directly to the agent from the sale proceeds, alongside repaying your main mortgage.
- You receive whatever remains after both charges, your solicitor's fees, and any estate agent commission.
One detail that trips people up: if you're selling and buying another home, the equity loan redemption happens on your current sale, not automatically transferring to your next property. Help to Buy equity loans are not portable — if you want a new equity loan on your next home, since the scheme closed to new applicants in 2023, this is generally no longer possible except in specific transitional circumstances that will by now have largely expired. Budget for full repayment as part of your moving costs, alongside items covered in our guide to exchange to completion for first-time buyers.
It's also worth asking your agent for an indicative redemption figure a few weeks before you list your home, rather than waiting until you have an offer — this gives you a realistic sense of your actual net proceeds before you commit to a moving budget or a new purchase.
Budgeting Strategy: Pay Interest, Staircase, or Wait?
There's no single right answer here — it depends on your local market, your savings position, and your appetite for extra borrowing. Below is a simplified comparison of the three broad strategies most owners consider once interest starts.
| Strategy | Pros | Cons |
|---|---|---|
| Keep paying rising interest, don't staircase | No lump sum needed; flexibility retained; simplest option | Interest cost compounds annually; capital owed still tracks property value upward if it rises |
| Staircase in stages using savings | Reduces interest immediately in proportion to amount cleared; no new borrowing | Ties up savings; valuation and legal costs each time; timing risk if you staircase just before a value dip |
| Staircase via remortgage/further advance | Clears equity loan without depleting savings; can be done alongside a rate renewal | Increases main mortgage debt and monthly payment; subject to affordability and lender criteria |
A useful exercise is to estimate your interest cost over the next five years at your current rate trajectory, and compare that total to the cost of staircasing now at today's valuation. If your area has seen strong price growth and is likely to continue, staircasing sooner rather than later usually works out cheaper in cash terms — because the 20% or 40% figure is being applied to a lower base value now than it would be in five years.
Run the maths on your specific numbers rather than following blanket advice — a homeowner in a slow-growth area with a large loan and high interest is in a very different position from one in a fast-growth area with a small loan.
If you're unsure which way to go, a mortgage broker who specifically handles Help to Buy staircasing cases (not all do) can model the numbers against your actual mortgage renewal date, which tends to be more useful than a generic online calculator.
Common Mistakes Owners Make With Help to Buy Repayment
- Assuming the loan is a fixed cash amount. As covered above, it is a percentage of current value, and this catches out even owners who've held the loan for years.
- Forgetting the £1 monthly management fee. It's small, but missed payments can affect your record with the agent and, in theory, your credit file if it escalates unmanaged.
- Not requesting an annual statement. These should be issued automatically, but owners who've moved home, changed email, or simply not opened the letters can lose track of their current interest rate and balance.
- Leaving remortgage consent to the last minute. Homes England or your regional agent's consent process can take several weeks — starting this only when your fixed rate has already expired can leave you on a lender's more expensive standard variable rate in the interim.
- Letting the property without permission. Help to Buy properties are intended as owner-occupied homes. Renting out a room or the whole property without informing your agent can breach the terms of the loan.
- Assuming staircasing must be all-or-nothing. Partial staircasing (in permitted increments) is usually available and can be a more manageable way to reduce interest exposure without a large lump sum.
- Ignoring the valuation validity window. If your RICS valuation expires (typically after three months) before you complete a staircasing transaction, you may need — and pay for — a fresh one.
- Comparing your loan to a friend's without checking the scheme cohort. The 2013–2021 and 2021–2023 scheme rules differ in interest calculation and, in the later scheme, regional price caps — so two loans of similar size can behave quite differently.
If you've lost track of your paperwork or moved since completion, most regional Help to Buy agents (Homes England directly manages some regions; others use appointed administrators) have a process for re-establishing contact and reissuing your account details.
Key Dates and Milestones: A Quick Reference Timeline
It helps to have the whole lifecycle of a Help to Buy equity loan in one place, since the costs and obligations change at each stage.
| Milestone | What to expect |
|---|---|
| Completion | Equity loan drawn down (20% or 40% of purchase price); £1/month management fee begins |
| Years 1–5 | Interest-free period; only the £1 fee and your main mortgage payments |
| Year 5, ahead of anniversary | Good time to request a valuation estimate and review your options before interest starts |
| Year 6 | Interest begins, typically at 1.75% of the original loan amount |
| Year 7 onward | Interest rate increases annually (RPI + 1%, or CPI + 2% for later scheme cohorts) |
| Any point from year 1 | Staircasing available in permitted increments, subject to a current RICS valuation |
| Any point | Sale triggers full repayment from proceeds, based on the agreed sale price |
| Remortgage renewal dates | Requires agent consent if changing lender or borrowing more while the loan remains in place |
| Year 25 (or mortgage term end) | Loan and any outstanding balance typically due in full if not already repaid |
Because the scheme closed to new applicants in March 2023, the population of active Help to Buy loans is now firmly in its "middle age" — a large cohort taken out between 2016 and 2020 is moving through the year 6–10 interest period simultaneously, which is part of why interest cost confusion has become such a common concern among new build owners recently.
The five-year mark isn't a deadline to act — it's simply the point at which the cost profile of the loan changes. What you do next depends entirely on your own finances and local market, not a fixed rule.
If you're approaching year five, it's worth pencilling in a calendar reminder to request your first interest statement and to speak to a broker about your remortgage options at the same time, rather than treating them as two separate tasks.
Frequently Asked Questions
How much interest will I actually pay on my Help to Buy equity loan?
It depends on your original loan amount, your scheme cohort, and the RPI or CPI figures applied each year since your fifth anniversary. As a rough guide, interest starts at 1.75% of the original loan in year six and increases annually thereafter, so the cash amount typically rises each year — check your annual statement for your exact current rate rather than relying on averages.
Does the amount I owe go up if my house price goes up?
Yes. You always owe the same percentage (usually 20%, or 40% in London) of your home's current market value at the point of staircasing, remortgage-linked repayment, or sale — not a fixed cash figure based on your original purchase price.
Can I pay off my Help to Buy loan early to avoid interest?
Yes, this is called staircasing, and you can typically do it in permitted increments (commonly 10%, though some scheme variants allow smaller steps) at any point after completion, subject to a current RICS valuation and the associated fees.
What happens to my Help to Buy loan if I remortgage?
You don't have to repay the equity loan just to remortgage your main mortgage — many owners remortgage the main portion while leaving the equity loan in place, but you'll typically need consent from your Help to Buy agent and to check your prospective lender is willing to accept the second charge.
Do I need a new valuation every time I want an update on what I owe?
For an official staircasing or redemption transaction, yes — a RICS valuation is required and is typically valid for three months. For a rough estimate to help you plan, you can use recent local sold prices or an estate agent's opinion, but this won't be accepted by your Help to Buy agent for an actual transaction.
What if my home has fallen in value since I bought it?
The amount you owe falls in line with the lower valuation, since it's calculated as a percentage of current value. This can make repayment cheaper in cash terms, though it may also affect your ability to remortgage or sell depending on your overall loan-to-value position.
Can I still get a Help to Buy equity loan on a new purchase?
No — the scheme closed to new applications in England in March 2023, and the final completions took place shortly after. Existing loans continue under their original terms until repaid, staircased, or the term ends, but no new loans are being issued.
Is Help to Buy interest tax-deductible or does it affect my tax position?
For a standard owner-occupied home, no — Help to Buy interest is a personal cost, not a deductible business expense. If you have unusual circumstances (for example, letting part of the property with agent permission), it's worth speaking to an accountant, since tax treatment can vary and general guides shouldn't be relied on for individual tax decisions.
Next Steps
Understanding your Help to Buy equity loan is easier once you can see your actual numbers rather than typical scheme figures. A few practical next steps:
- Request your current annual statement from your Help to Buy agent to confirm your exact interest rate, loan balance basis, and management fee status.
- Get an informal valuation estimate for your property before committing to the cost of a formal RICS valuation, so you have a realistic sense of what staircasing or selling might actually cost.
- Speak to a broker experienced with Help to Buy before your next mortgage renewal, particularly if you're considering staircasing as part of a remortgage.
- Revisit your household budget to see how rising equity loan interest fits alongside your mortgage, service charges and other running costs.
If you're weighing up your next move — whether that's staying and staircasing, remortgaging, or selling and buying elsewhere — new-builds.co.uk's tools can help with the wider picture:
- Browse current new build developments if you're considering your next purchase.
- Research builders and their track records before committing to a new development.
- Search live properties for sale to gauge what your current equity, once the loan is repaid, might buy elsewhere.
- Use the interactive map to compare areas and price growth trends that could affect your future staircasing costs.
- Explore our full range of buyer tools, including budgeting and affordability calculators.
- Use compare to weigh up developments or locations side by side if you're planning a move.
For related reading on managing costs after completion, see our guides on financial planning after buying your new build home and new build warranty costs and what they cover, both of which sit alongside equity loan interest as part of your overall ownership budget.