Help to Buy Repayment After 5 Years
From year six of your Help to Buy Equity Loan, the interest-free period ends, and you'll begin incurring interest charges that increase annually.
This guide provides essential information on Help to Buy repayment after 5 years, including how to calculate costs and explore your options for managing or repaying your loan.
- Your Help to Buy Equity Loan is interest-free for the first 5 years; after this, monthly interest payments begin.
- From Year 6, interest starts at 1.75% and increases annually by RPI + 1% (or CPI + 2% for newer loans), causing repayments to rise.
- The amount you repay is a percentage of your property's current market value, not the original loan amount, meaning it can rise with house price increases.
- Proactive repayment (staircasing, remortgaging, or selling) within 10 years is advised to minimise long-term costs. You'll need a Help to Buy Solicitor to help with any of these options.
- If you are repaying by selling the property, you'll need to meet some requirements to get Authority to Complete.
- The Help to Buy administrator has now changed; please liaise with Homes England for customer services on your Help to Buy loan.
What happens after 5 years with your Help to Buy Equity Loan?
The initial five-year period of your Help to Buy Equity Loan offers an interest-free boost to help you get on the property ladder. During this time, your only payment is a nominal £1 per month management fee. However, this concludes as you enter the sixth year of your loan.
From Year 6 onwards, you will begin paying interest on the outstanding balance of your equity loan. This interest is calculated annually and paid in monthly instalments.
The initial interest rate starts at 1.75% annually and, importantly, increases each year by the Retail Price Index (RPI) plus 1% (for loans taken out between 2013-2021) or Consumer Price Index (CPI) plus 2% (for loans taken out between 2021-2023).
The Help to Buy scheme was designed to encourage homeowners to repay their equity loan, either partially (known as staircasing) or in full (redemption), ideally within the first ten years.
Delaying repayment beyond this period can lead to higher costs as the interest compounds and the loan amount (being a percentage of your property's value) potentially grows with house price increases.
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How much do you pay back after 5 years of Help to Buy?
The amount you begin to pay back after 5 years consists of two main components: monthly interest payments and, if you choose to make them, one-off repayments (staircasing or full redemption).
Calculating Help to Buy repayment after 5 years
When it comes to repaying the capital of your equity loan, the amount you owe is always a percentage of your property's current market value, not the amount you originally borrowed.
For example, if you took a 20% equity loan on a £200,000 property (£40,000 loan), and your property is now valued at £250,000, your 20% equity loan now represents £50,000.
Repayment options
How much you pay back, and how quickly, will depend on your financial situation and the repayment strategy you choose. Common repayment methods include:
- Utilising personal savings to make a lump-sum payment.
- Considering a Help to Buy equity loan remortgage after 5 years, where you remortgage your property for a larger amount to cover the equity loan. This allows you to consolidate your borrowing and potentially benefit from better mortgage rates.
- Selling the property, at which point the equity loan must be repaid from the sale proceeds.
- From April 1st, 2013, to March 31st, 2023, nearly 400,000 homes in England were purchased with a Help to Buy Equity Loan.
- Most of these properties (around 328,000) were bought by first-time buyers.
- A separate Help to Buy scheme in Wales supported 14,350 completions as of June 30, 2024, and is still active.
- A permanent scheme used by over 27,500 service personnel exists: Forces Help to Buy.
- A private sector initiative called 'New Build Boost' launched in 2025, offering an alternative to Help to Buy.
How long do you have to pay back your Help to Buy Loan?
The Help to Buy Equity Loan needs to be repaid either when you sell your property or, at the latest, within 25 years from the date you took out the loan.
This means that even if you haven't sold your home, the loan will become fully due at the end of this 25-year term. For those who took out the loan with a 25-year mortgage, the equity loan term typically aligns with the mortgage term.
If you initially took out a 20% equity loan, you will repay 20% of the property's value at the point of repayment, not 20% of the purchase price or a fixed cash sum.
Our experienced conveyancing solicitors can help you staircase your Help to Buy equity loan.
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Is it worth paying off Help to Buy early?
For most homeowners with an outstanding Help to Buy Equity Loan, it is worth considering paying it off as early as possible, especially if you have the financial means to do so.
The primary reason for this is to minimise or stop the escalating interest charges that begin after the initial five-year interest-free period. As the interest rate increases annually, and the repayment amount is linked to your property's rising market value, the total cost of your loan could grow significantly.
The benefits of early Help to Buy repayment
- By repaying your equity loan early, you stop the annual interest payments that commence from Year 6 and continue to increase.
- Once the equity loan is repaid, the government no longer holds a percentage share in your property. This means you will benefit from 100% of any future increase in your home's value.
- Any home improvements that add value to the property mean you'll receive the full benefit of the appreciation value.
If you are considering a remortgage to pay off your equity loan, you must comfortably afford the new mortgage repayments. While extending the loan term beyond the original 25 years is not an option for the equity loan portion, a new, larger mortgage might result in higher monthly outgoings.
You'll also want to secure a favourable mortgage rate that is competitive compared to the current and projected interest rates on your equity loan. Our independent mortgage broker can help you assess your options and find the best remortgage deal for your circumstances.
How much do you pay back per month on Help to Buy after 5 years?
The calculation of your monthly interest payment is influenced by two key factors:
- Annual Interest Rate: The initial 1.75% interest rate rises each year by RPI + 1% (for 2013-2021 loans) or CPI + 2% (for 2021-2023 loans). This means the percentage applied to your loan increases annually.
- Property Value: As the equity loan is a percentage of your property's current market value, if your home's value rises over time, the underlying amount on which interest is charged also increases.
Therefore, each year, not only does the interest rate increase, but the value of the equity loan that this percentage is applied to can also increase (assuming consistent upward trends in property prices).
Use our handy Help to Buy repayment calcuator to work out your monthly payments.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
