If you bought your home using a Help to Buy (HTB) equity loan, you might now be wondering whether to repay it when you remortgage — especially if your interest-free period has ended or you're planning ahead for your next mortgage deal.
With property values changing and interest now charged on HTB loans after year five, it’s a big decision that could impact your finances for years to come.
Here’s what you need to know to help you weigh up your options.
How Help to Buy Loans Work
The Help to Buy scheme helped many first-time buyers get on the ladder with just a 5% deposit. The government then provided an equity loan of up to 20% of the property’s value (or 40% in London), which was interest-free for the first five years.
After that, you start paying interest — and here’s the key part:
! The amount you owe is based on the current market value of your home, not what you originally borrowed.
So, if your home has increased in value, the amount you’ll need to repay will have gone up too.
When remortgaging, you have two main options:
- Keep the equity loan and continue paying the interest
- Repay it (either fully or partially)
Option 1: Keep the Help to Buy Loan
Pros:
✔ Lower mortgage borrowing: Your HTB loan still covers part of your property, so you may have a smaller mortgage - which can mean lower repayments.
✔ More flexibility: If repaying the HTB loan would stretch your finances too much, you can continue paying the interest and focus on other priorities.
Cons:
✖ Interest costs will increase: The interest rate on your HTB loan increases each April in line with inflation. Depending on when you took the loan, this could be RPI + 1% or CPI + 2%. Over time, this can add up.
✖ More expensive to repay later: As your home value rises, the amount you owe on your HTB loan increases. Waiting longer could mean a higher repayment amount.
✖ Limited mortgage options. Not all lenders will accept a remortgage application if the HTB loan is in place.
Option 2: Repay the Help to Buy Loan
You can repay the full loan amount or make partial payments of at least 10% of your home’s current value. You'll need to get a market valuation report from a chartered surveyor when you make a repayment.
Pros:
✔ Full homeownership: Once the HTB loan is repaid, you fully own your home without the government having a stake in it.
✔ No rising interest charges: You eliminate the growing interest costs that come after year five.
✔ More remortgage options: Without the equity loan, you may have access to a wider range of mortgage deals at better rates.
Cons:
✖ Large lump sum needed: Repaying the HTB loan means paying a percentage of your home’s value at that time, which could be more than what you originally borrowed.
✖ Higher mortgage payments (if you remortgage to repay it): If you don’t have savings to clear the loan, you’ll need to borrow more through your mortgage, increasing monthly repayments.
Key Considerations Before Deciding
Can you afford to repay it? If you have savings or can secure a competitive mortgage deal, repaying might be a good move.
What’s your home worth now? If your property has significantly increased in value, the HTB loan repayment will be higher than what you originally borrowed.
What’s your mortgage situation? Check what mortgage rates you could get with and without the HTB loan. Sometimes keeping it could be the more affordable option.
Long-term financial goals. If you plan to sell in the near future, clearing the HTB loan could give you more equity and flexibility.
What Happens Now?
If you want to repay the HTB loan, you’ll need to get a RICS valuation (valid for three months) and instruct a solicitor to handle the repayment process.
You need to let your mortgage advisor know whether you plan to keep or repay the loan — this will affect which lenders are available to you
Need Further Advice?
Remortgaging when you still have a Help to Buy equity loan adds a few extra steps — but you don’t have to figure it all out alone. Whether you’re looking for the most suitable mortgage deal, need advice on repaying the loan, or want to explore your options, I can help you understand the numbers and the implications for your wider financial picture.
Get in touch with today here or book directly onto my calendar https://link.willowtree-fs.co.uk/widget/bookings/30-min-initial-appointment.
Willow Tree Financial Services is a Financial Adviser based in Polegate, East Sussex. We specialise in:
- Financial Planning
- Mortgages
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Your home may be repossessed if you do not keep up repayments on your mortgage.
The value of investments and pensions, and any income they produce, can fall as well as rise. You may get back less than you invested.
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