Help to Buy Staircasing: Partial repayment of the loan

Help to Buy staircasing is the formal legal process of repaying your Homes England equity loan in partial instalments, rather than clearing the entire debt at once. By making a partial repayment, you reduce the government's equity share in your property and increase your own.

There are strict Homes England rules regarding how much you can staircase. You are not permitted to pay off random amounts; you may only staircase in multiples of 10%. This means you can choose to repay 10%, 20%, or 30% of your property's current market value at a time. Furthermore, your remaining equity loan balance cannot drop below 5%. If a 10% repayment would leave you with a balance of less than 5%, you will be required to redeem the loan in full.

If you are repaying all of your equity loan, then read our complete guide here: How to repay your Help to Buy loan in full.

Why choose to staircase?

For many homeowners, finding the funds to redeem a 20% or 40% (if the property was in London) equity loan in one lump sum is not feasible. Staircasing offers a strategic way to manage the debt in more affordable chunks.

The primary financial benefit of staircasing becomes clear as you approach your sixth year of ownership. For the first five years, your Help to Buy loan is interest-free. However, starting in year six, Homes England charges an annual interest fee of 1.75% on your original loan amount, which then increases each year in line with inflation.

By making a partial repayment before or during these interest-bearing years, you actively reduce the outstanding loan balance. Because the ongoing interest is calculated against your remaining equity balance, staircasing directly reduces your monthly interest payments, saving you significant money over the lifetime of the loan.

What are the requirements to Staircase a Help to Buy Equity Loan?

• The minimum amount you can staircase at one time is 10% (of the total market value of the property at the time you staircase).
• The above requirement means that when the mortgage lenders’ equity in your property is less than 20%, you can only repay the equity loan in full.
• You may only staircase in multiples of 10%: 10%, 20%, 30% etc.
• You cannot staircase if there are any arrears of interest payments and/or management fees on your mortgage account. Any arrears must be cleared before a staircase transaction can proceed.

You won't pay interest for the first five years. Starting in the sixth year, you'll be charged interest at a rate of 1.75% on the equity loan amount you originally borrowed. This annual interest is divided into monthly payments.

Example:

• Property purchase price: £200,000
• Equity loan percentage: 20%
• Equity loan: £40,000
• Annual interest payment in year 6 (1.75% of the equity loan): £700
• Monthly interest payment in year 6: £58.33

Making part repayments on your equity loan can decrease your interest payments because the interest rate is applied to a smaller amount.

Funding your staircasing transaction

There are two primary ways homeowners finance a partial repayment. The legal work your solicitor must carry out will differ depending on which route you choose.

1. Using savings or a family gift

If you have saved enough money or have been given a financial gift, you can staircase without involving a mortgage lender. While this is often faster, using private capital means your solicitor is legally obligated to perform rigorous Source of Funds checks.

If the money has been gifted by a family member, they will also need to provide their ID, bank statements, and sign a Gifted Deposit Letter to confirm the money is an unconditional gift and not a loan.

2. Remortgaging to staircase

Many homeowners choose to borrow additional money against their main mortgage (either through a further advance with their current lender or by remortgaging to a new lender) to fund the staircasing payment.

What is a Deed of Postponement?
If you are remortgaging to a staircase, your main mortgage lender will insist that their debt takes priority over the remaining government equity loan. To do this, your conveyancing solicitor must apply to Homes England for a Deed of Postponement. This is a legal agreement in which Homes England formally agrees to "postpone" its legal charge, allowing your new mortgage lender to rank first on your title deeds. Homes England will not approve the staircasing transaction until this deed is agreed upon.