How the Help to Buy maths actually work
Under the original Help to Buy Equity Loan scheme, a first-time buyer purchasing a qualifying new-build property put down a 5% deposit, took out a 75% mortgage (or 55% in London) and received an equity loan from Homes England for the remaining 20% (or 40% in London). The equity loan was interest-free for 5 years.
The critical point that surprises many borrowers: the equity loan is denominated as a percentage of the property's value at any given time, not as a fixed pound amount. If you bought a £300,000 home with a 20% equity loan, you owed £60,000 at completion. Five years later, if the property is worth £375,000, you owe £75,000. House price growth has cost you the difference. Conversely, if prices fell to £270,000, you'd owe £54,000.
This is why timing your equity loan repayment matters. The cheapest moment to repay is when your property's value is lowest — but practically that's hard to engineer, and most borrowers focus instead on remortgaging at year 5 to release equity and repay the loan before interest charges begin.
Interest charges from year 6 onwards
Interest on the equity loan starts in the sixth year after completion, at 1.75% of the original loan amount. From year 7, the interest rate increases each year by either RPI plus 1% (for loans pre-2021) or CPI plus 2% (for loans 2021 onwards). With inflation running above 3% through 2023–2025, many older Help to Buy borrowers have seen the interest rate on their equity loan rise materially each year.
Worked example: a £60,000 equity loan from 2018 was charged at 1.75% in 2024 (£87.50/month), rising to 1.96% in 2025 (£98/month) after RPI+1%, and approximately 2.18% in 2026 (£109/month). The trajectory is upward and uncapped — there's no built-in ceiling on how high the rate can go.
The interest is paid monthly to Target HCA, who administer the loans on behalf of Homes England. It is separate from your main mortgage payment and shows up as a direct debit.
Repaying the equity loan: how it works
Equity loan repayment must happen in chunks of either 10% or 20% of the property's value at the time of repayment (or a full repayment of the outstanding balance). Each repayment requires a RICS surveyor valuation, paid for by you (typically £400–£700).
For most borrowers, the practical route is to remortgage at the end of the 5-year fixed period, increasing the main mortgage size enough to release cash, and using that cash to clear the equity loan. This requires the property to have appreciated enough (or the borrower's income to have grown enough) to support a larger mortgage. Most lenders treat this as a "staircasing remortgage" and have streamlined processes for it.
Homes England must consent to any remortgage, even where the equity loan isn't being repaid. The process is administrative but adds 2–4 weeks to a typical remortgage timeline.
What replaced Help to Buy in England
For new buyers in 2026, three main schemes fill the gap left by Help to Buy:
Mortgage Guarantee Scheme: The government provides a guarantee to lenders offering 95% LTV mortgages, encouraging banks to lend at higher LTV. Buyers need only a 5% deposit and access mainstream rates. No equity loan, no government stake in your home — just a normal mortgage with slightly higher rates than 90% LTV products. Available on most property types including older homes.
Shared Ownership: Buyers purchase 25%–75% of a home (with their own mortgage), and pay subsidised rent to a housing association on the remaining share. They can "staircase" — buying further shares over time — until they own 100%. Available on many new-build developments. Lower deposit requirement (5% of the purchased share, not the full property value) but rent and service charges are ongoing.
First Homes: Selected new-build properties offered at a 30%–50% discount to first-time buyers within income caps (£80,000 nationally, £90,000 in London). The discount remains attached to the property when you sell, so future buyers also benefit. Limited supply but extremely valuable where available.
Help to Buy in Wales and Scotland
Help to Buy – Wales remains open at the time of writing, operating similarly to the English scheme with 20% equity loans on qualifying new-build properties up to £300,000. The Welsh Government has extended the scheme multiple times.
In Scotland, the Help to Buy (Scotland) scheme closed to new applications in 2022. The Open Market Shared Equity Scheme remains available for low-to-moderate income buyers.
Common borrower mistakes
Two errors come up repeatedly with existing Help to Buy borrowers. The first is forgetting the equity loan exists when planning a remortgage or sale — borrowers compare their main mortgage balance to the sale price and are shocked to find Homes England takes a percentage of the proceeds.
The second is waiting too long to repay. The compounding RPI+1% or CPI+2% interest structure means the longer you leave the equity loan in place from year 6 onwards, the more expensive it becomes. Most brokers recommend planning the repayment route 12 months before the interest-free period ends.
Your home may be repossessed if you do not keep up repayments on your mortgage. First Rung Now is not FCA authorised or regulated; we introduce consumers to FCA-regulated mortgage brokers. Nothing in this article is financial advice.