Help to Buy Equity Loan Repayment in 2026: When to Pay It Off, How Much It Costs

Around 350,000 households in England took out a Help to Buy equity loan between the scheme launching in 2013 and closing to new applicants in March 2023. For those who bought between 2018 and 2021, the 5-year interest-free period is ending in 2023 to 2026, and the question of whether to pay the loan off has moved from optional to urgent.

How the loan actually works

• The government lent you between 5% and 20% (40% in London) of the purchase price of a new build.
• The loan is interest-free for 5 years from completion.
• From year 6, interest starts at 1.75% of the loan amount and rises annually with RPI plus 2%.
• The loan is repayable in full when you sell, or in chunks (staircasing) at any time.
• Crucially, the loan is denominated as a percentage of the property's current value, not as a fixed sum.

The proportionate growth that catches people out

If you bought a £300,000 flat in 2020 with a 20% equity loan (£60,000), and the property is now worth £400,000 in 2026, the loan is still 20% of the value: £80,000. The government share grew by £20,000 without you doing anything.

This is the single most important number to understand. The loan is not £60,000 plus interest. It is 20% of whatever the property is currently worth, plus interest from year 6.

Interest from year 6: the actual numbers

If you completed in April 2020, the interest-free period ends in April 2025. From then:

• Year 6: 1.75% of the original loan amount per year.
• Year 7: 1.75% + RPI + 2% (uplift on the rate, not the loan).
• And so on, compounding annually.

On a £60,000 original loan, year 6 interest is £1,050, payable monthly at £87.50. If RPI is 4%, year 7 interest jumps to 7.75% × £60,000 = £4,650 per year. Within 3 years of the interest period starting, the monthly interest can exceed £300.

The interest is on the original loan amount, but if you sell, you repay the percentage of the current value. Many owners pay interest at one calculation and a much larger sum on sale because the property has appreciated.

Staircasing: paying off part of the loan

You can pay off the equity loan in 10% chunks (of the original loan, not the property value) at any time. Each repayment requires:

• A RICS valuation of the property (cost £150 to £300).
• Conveyancing fees (£500 to £1,000 per staircasing).
• Administration fees from Target HCA (the loan administrator).

Per the proportional rule, if you bought at £300k with a £60k loan and the property is now £400k, paying off 10% of the original loan means paying 2% of the current value: £8,000. Not the £6,000 that 10% of £60k would suggest.

Remortgage to repay in full

For most owners, paying off the equity loan in full at the next remortgage is the best move. Mechanically:

1. Get a RICS valuation (the government uses this to determine the repayment amount).
2. Apply for a new mortgage covering your existing mortgage balance plus the equity loan repayment.
3. Your new mortgage lender pays both the old mortgage and the equity loan on completion of the remortgage.
4. You end up with one bigger mortgage and no equity loan.

The catch: you need enough equity in the property to support the new larger mortgage. If property prices have fallen since you bought, this can be hard.

When NOT to rush to pay it off

• The property has barely moved in value: your proportionate repayment is small.
• Your existing mortgage has a long-dated fix at a much lower rate than current market rates: a remortgage now would lose you the cheap fix.
• You are still in the 5-year interest-free window and have no urgency.

When to pay it off now

• The 5-year interest-free window has just ended and interest has started accruing.
• The property has appreciated 20%+ since purchase.
• You plan to sell within 2 years (sale forces full repayment anyway and interest in the meantime is wasted).
• Your current mortgage is on a follow-on or SVR rate, so a remortgage saves elsewhere too.

Selling with an equity loan still in place

When you sell, the equity loan is repaid in full from the sale proceeds, before any goes to you. The conveyancer arranges this automatically.

The repayment is on the current valuation, not the sale price, although these are usually similar. Get the RICS valuation done 30 to 60 days before exchange to minimise surprises.

Practical steps for 2026

1. Log into the Target HCA portal to see your exact loan balance, original percentage and interest start date.
2. Get a free desktop valuation from your existing mortgage lender (most offer one annually).
3. Calculate the proportional repayment at current value.
4. Compare against your remortgage options.
5. Get a formal RICS valuation only when you are ready to action a repayment or remortgage (they expire after 3 months).