If you bought your home between 2013 and 2023 using the Help to Buy equity loan scheme, you have a second charge on your property held by Homes England. For buyers who took their loan between 2016 and 2021, the interest-free period is ending or has already ended. From month 61, interest charges begin. From month 61 of a loan taken in 2018, that started in 2023. If you are not already paying equity loan interest, you will be soon — and many homeowners do not realise it until the first charge arrives. This guide covers your options, the numbers, and the decision most Help to Buy borrowers need to make.
How the Help to Buy Equity Loan Works
The Help to Buy equity loan provided up to 20% of the purchase price (40% in London) as an interest-free government loan for the first five years. You provided a minimum 5% deposit, took a standard mortgage for the remainder, and Homes England held an equity stake in your property proportional to the loan percentage — not a fixed cash amount.
This distinction matters enormously for the redemption calculation. If you borrowed 20% of a 300,000 pound property (60,000 pounds), and your property is now worth 400,000 pounds, you owe 20% of 400,000 — 80,000 pounds — not the original 60,000. The equity loan tracks the property value, not the original loan amount. In a market where property values have risen, the equity loan redemption figure is higher than what was borrowed.
Equity loan owed = loan percentage x current property value.
Example: 20% loan on a property bought at 280,000 (loan = 56,000). Property now worth 360,000. Redemption figure: 20% x 360,000 = 72,000. You owe 16,000 more than you borrowed, purely from property value growth.
When Do Interest Charges Start?
Interest charges begin at month 61 — the start of year six of the equity loan. The rate starts at 1.75% of the outstanding equity loan value and increases each April by the Consumer Price Index plus 2%.
| Purchase Year | Interest Starts | 2025 Interest Rate (approx) |
|---|---|---|
| 2017 | Already charging (since 2022) | ~3.5% of equity loan value |
| 2018 | Already charging (since 2023) | ~3.0% of equity loan value |
| 2019 | Already charging (since 2024) | ~2.5% of equity loan value |
| 2020 | Starts 2025 | 1.75% of equity loan value |
| 2021 | Starts 2026 | 1.75% of equity loan value |
On a 72,000 pound equity loan at the current rate of approximately 2.5%, the annual interest charge is 1,800 pounds — 150 pounds per month — on top of your existing mortgage payment. This charge increases every April. It does not reduce the equity loan balance. It is pure interest servicing with no capital repayment element.
Your Two Options — Redeem or Retain
Every Help to Buy borrower faces the same decision: redeem the equity loan (pay it off in full and own your property outright), or retain it (keep paying the interest charges and leave Homes England's stake in place).
| Redeem the Equity Loan | Retain the Equity Loan | |
|---|---|---|
| What happens | You pay off Homes England in full. They release the second charge. You own 100% of your property. | Interest charges begin at month 61 and increase annually. Homes England retains their equity stake. |
| How you fund it | Remortgage to a larger loan, using equity in the property. Or pay from savings. | No action required. Monthly interest charge begins automatically. |
| Financial outcome | Higher mortgage, but no equity loan interest. All future property growth is yours. | Lower mortgage, but growing annual interest charge. Homes England's stake grows with property value. |
| Best for | Homeowners with sufficient equity and income to support the larger mortgage. | Homeowners who cannot afford the remortgage or whose property value has fallen. |
The Redemption Process — Step by Step
Redeeming the Help to Buy equity loan is more involved than a standard remortgage. There are four steps and Homes England must be involved at each stage.
Four Steps to Redeem Your Help to Buy Equity Loan
Step 1: RICS valuation. You must commission a RICS-registered surveyor to value the property. This determines the current market value and therefore the redemption figure. The valuation is valid for three months. Homes England must approve the surveyor — they maintain a list of approved panel valuers.
Step 2: Redemption figure from Homes England. Once the valuation is confirmed, Homes England calculate the redemption figure based on the current property value and your loan percentage. Request this formally — it takes 15 to 20 working days.
Step 3: Remortgage application. Apply to a lender for a mortgage that covers both your existing mortgage balance and the equity loan redemption figure. The combined loan must be affordable within standard lender criteria. We coordinate the remortgage application with the Homes England process to ensure timing aligns.
Step 4: Simultaneous completion. On completion, the conveyancer pays both your existing lender (to discharge the first mortgage) and Homes England (to redeem the equity loan). Homes England releases the second charge. You own the property outright.
The Basingstoke Help to Buy Market
Basingstoke is one of the highest-volume Help to Buy markets in Hampshire. The Chineham, Brighton Hill, Lychpit and Popley new build developments of 2015 to 2020 produced thousands of Help to Buy purchases. Many of those buyers are now in year six or seven of their equity loan with interest charges already running or imminent.
The specific Basingstoke complication is that property values in some of these estates have not grown as strongly as the wider Hampshire market. A flat purchased at 200,000 in 2018 with a 40,000 equity loan (20%) may now be worth 210,000 to 225,000. The redemption figure is 42,000 to 45,000 — manageable. But the combined outstanding mortgage plus equity loan may leave very limited equity for a remortgage, meaning the loan-to-value on the new mortgage is high and rates are less competitive. We assess the specific numbers for each Basingstoke Help to Buy case before recommending.
Help to Buy remortgage Basingstoke →
When Redemption Does Not Make Sense
Redeeming the equity loan is not always the right answer. If your property has fallen in value since purchase — or risen very modestly — the redemption figure may be close to the original loan. In that case, retaining the equity loan and paying the interest charges may be cheaper than the additional mortgage interest on the larger remortgage required to redeem it.
The break-even calculation depends on four variables: the equity loan interest rate, your remortgage rate, the redemption figure, and how long you plan to stay in the property. We run this calculation for every Help to Buy remortgage client before recommending — there is no universal answer, only the right answer for your specific numbers.
The Timing Trap — What to Avoid
Many Help to Buy borrowers act too late. They receive the first interest charge, realise they should have acted earlier, and then discover that the remortgage process takes 6 to 10 weeks when the Homes England redemption steps are factored in. Meanwhile the interest charges are running and increasing.
The right time to review is 6 months before month 61. That gives enough time to commission the RICS valuation, obtain the redemption figure from Homes England, complete the remortgage and redeem the equity loan before the first interest charge arrives — if redemption is the right decision for your situation.
If interest charges have already started, redemption is still available. The process is identical regardless of how far into the interest-charging period you are. The sooner you act, the sooner the charges stop.
What If My Property Value Has Fallen or I Have Little Equity?
If your property value has not grown enough to support a remortgage that covers both the existing mortgage and the equity loan redemption, your options are more limited. You can retain the equity loan and pay the interest charges, or look at partial staircase redemption — repaying part of the equity loan to reduce the ongoing interest charge — if your finances allow a partial payment from savings. Full redemption in a low-equity situation typically requires either a family contribution, a personal loan (which affects affordability assessment), or waiting for further property value growth before acting.
We assess each Help to Buy situation individually. If full redemption is not currently achievable, we explain the options clearly and the timeline for when it becomes viable.