Mortgage & Property Guide · 2026/27

Help to Buy Equity Loan Repayment 2026/27: Interest, Staircasing & Redemption

Hundreds of thousands of homeowners who bought with a Help to Buy equity loan between 2013 and 2023 are now facing rising interest fees as their five-year interest-free period ends. This guide explains exactly how the interest, staircasing, and full repayment (redemption) rules work -- and the numbers that determine what you owe.

Last updated: 2 July 2026Last reviewed: 2 July 2026How we verify

How the Help to Buy Equity Loan Works

Under the Help to Buy Equity Loan scheme (closed to new applicants since October 2022), the government lent first-time buyers of new-build homes an equity loan of 20% of the purchase price (40% in London), on top of a minimum 5% cash deposit, leaving a mortgage of 75% (55% in London) to cover the rest.

Crucially, the equity loan is not a fixed cash debt -- it is a percentage stake in the property. That means what you eventually repay depends on the property's value at the time of repayment, not the amount originally borrowed.

The Interest Fee Timeline

Period	Interest fee
Years 1–5	£0 (interest-free)
Year 6	1.75% of the original loan amount
Year 7 onwards	Previous year's rate + (RPI + 2%), each April

This compounding structure means the interest fee can rise significantly during periods of higher inflation, since the RPI+2% uplift applies to the rate itself, not just the original loan. Many homeowners find it worth staircasing or fully redeeming before the fee climbs too high, especially in years following elevated RPI readings.

Worked Example: Repaying a 20% Equity Loan

Tom bought a new-build for £250,000 in 2019, using a 20% equity loan of £50,000. By 2026, an independent RICS valuation values the property at £300,000. Because the equity loan is a percentage of current value, Tom owes 20% of £300,000 = £60,000 to fully redeem the loan -- £10,000 more than he originally borrowed, reflecting the property's growth in value.

If Tom instead chooses to staircase 10% now (buying back half of his 20% stake), he pays 10% of £300,000 = £30,000, reducing his outstanding equity loan to 10% of the property's future value, and reducing the base on which future interest is charged.

Key Help to Buy Facts at a Glance

Interest-free period: First 5 years from legal completion
Year 6 interest rate: 1.75% of original loan amount
Year 7+ increase: RPI (previous Nov) + 2%, each April
Repayment basis: % of current market value, not original price
Minimum staircasing step: Usually 10% (5% on some scheme versions)
Scheme status: Closed to new buyers since Oct 2022

Frequently Asked Questions

Is the Help to Buy equity loan interest-free forever?

No. The equity loan is interest-free for the first five years only, starting from legal completion. From the sixth year, an interest fee applies -- 1.75% of the loan amount in year six, then rising each subsequent year by the increase in the Retail Prices Index (RPI) plus 2%. The fee is charged monthly and increases every April.

How is the Help to Buy interest fee calculated after year 5?

In year six, the annual interest is 1.75% of the original equity loan amount (not the current property value). From year seven onwards, the rate increases each April by RPI (measured the previous November) plus 2 percentage points. For example, if RPI was 3% in a given year, the rate for the following year would increase by 5 percentage points (3% + 2%) compared to the prior rate, compounding year on year -- this can make the fee grow quickly if RPI is high.

Do I repay the equity loan as a fixed amount or a percentage?

The equity loan is always a percentage of your property's current market value, not a fixed cash amount. If you borrowed a 20% equity loan (40% in London) when you bought your home, you repay 20% (or 40%) of whatever the property is worth when you repay or staircase -- not 20% of the original purchase price. This means if your property has risen in value, you repay more in cash terms than you borrowed; if it has fallen, you repay less.

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What is staircasing and how does it work?

Staircasing is buying back portions of the equity loan in stages rather than all at once. You can typically staircase in minimum increments of 10% (5% in some later scheme versions) of the property's current value, up to owning 100%. Each staircasing payment requires a RICS valuation of your property at that time, and the amount you pay is that percentage of the valuation. Staircasing reduces both the outstanding loan percentage and, from the next anniversary, the monthly interest fee (since it is based on the remaining loan percentage).

How do I fully repay (redeem) my Help to Buy equity loan?

To fully redeem the loan, you instruct a RICS-qualified surveyor for an independent valuation of your property (valid for three months), then apply to your Help to Buy agent for a redemption statement showing the amount owed (the loan percentage x the valuation, plus any outstanding interest and admin fees). You then pay this in full, usually via your solicitor when you sell the property or by remortgaging to release the funds if staying put.

Can I repay the equity loan when I sell my home?

Yes -- most homeowners repay the equity loan at the point of sale. Your solicitor calculates the loan percentage of the final sale price and pays this to Homes England (or the relevant Help to Buy agent) directly from the sale proceeds before you receive the remaining balance. You cannot sell the property without also repaying (or staircasing to 0%) the equity loan.

What if my property has fallen in value since I bought it?

Because the equity loan is repaid as a percentage of current market value, a fall in value reduces the cash amount you owe. For example, a 20% equity loan on a property that has fallen from £250,000 to £220,000 would require repayment of £44,000 (20% of £220,000) rather than £50,000 (20% of the original price). This is one of the few scenarios where a falling market works in the borrower's favour, though it also means less equity in the home overall.

Are there fees on top of the equity loan repayment?

Yes. In addition to the equity loan percentage itself, you typically pay a RICS valuation fee (a few hundred pounds), an administration fee to the Help to Buy agent for processing the redemption or staircasing (also typically a few hundred pounds), and any legal fees your solicitor charges for handling the transaction. These fees apply whether you are fully redeeming or partially staircasing.

Is the Help to Buy scheme still open to new buyers?

No. The Help to Buy Equity Loan scheme closed to new applications on 31 October 2022, and the final scheme deadline for legal completion was 31 March 2023. However, this guide remains highly relevant because hundreds of thousands of existing homeowners still have live equity loans that they are paying interest on, staircasing, or planning to redeem.

Should I remortgage to repay the equity loan early?

It can make financial sense if mortgage rates are favourable and property values have not risen sharply, since the rising RPI+2% interest fee can become expensive over time -- especially during periods of high inflation. However, remortgaging to release equity for a large one-off repayment increases your main mortgage balance and monthly payments, so run the numbers on both the cost of staying with the equity loan versus the cost of additional mortgage borrowing before deciding. A mortgage broker experienced in Help to Buy redemptions can help compare the two.

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