What Was Help to Buy: Equity Loan?
Help to Buy: Equity Loan was a government scheme that ran in England from 2013 until 31 March 2023. It was designed to help first-time buyers (from 2021 onwards, restricted to first-time buyers only) purchase a newly built home with a smaller deposit by providing a government-backed equity loan.
Under the scheme, the government lent eligible buyers:
- Up to 20% of the property's value (outside London)
- Up to 40% of the property's value (in London)
Combined with a minimum 5% deposit from the buyer, this meant a mortgage of only 75% (or 55% in London) was needed, making it much easier to qualify for a competitive mortgage rate. The equity loan was interest-free for the first 5 years.
Properties had to be newly built and meet regional price caps. The final scheme (Help to Buy 2021–2023) had the following maximum property price caps:
| Region | Maximum Property Price |
|---|---|
| London | £600,000 |
| South East | £437,600 |
| East of England | £407,400 |
| South West | £349,000 |
| East Midlands | £261,900 |
| West Midlands | £255,600 |
| Yorkshire and the Humber | £228,100 |
| North West | £224,400 |
| North East | £186,100 |
The Management Fee: From Year 6 Onwards
If you have a Help to Buy equity loan, you paid no fees for the first 5 years. From year 6 onwards, you pay a management fee of:
- 1.75% of the outstanding equity loan in the first year of charges (year 6)
- This increases each April by the Retail Price Index (RPI) plus 2%
Management Fee Example
Suppose you borrowed 20% on a £250,000 property = £50,000 equity loan.
- Year 6 fee: 1.75% of £50,000 = £875/year (£72.92/month)
- If RPI = 3% and the rise is RPI+2% = 5%, Year 7 fee rises to: £875 × 1.05 = £918.75/year
- The fee is calculated on the loan amount — not the property value — but note the loan amount itself changes with property values at repayment.
Target HCA will contact you with your management fee amount and payment instructions before year 6 begins.
Equity Loan Repayment Estimator
Estimate how much you will need to repay based on your current property value. Remember: the loan is a percentage of property value, not a fixed cash amount.
How Repayment Works: The Critical Point
The most important thing to understand about a Help to Buy equity loan is that you do not repay a fixed cash amount. You repay the same percentage of the property value at the time you repay — regardless of what property values have done since you bought.
Worked Repayment Example
- You bought for £200,000, with a 20% equity loan = £40,000 borrowed
- Your property is now worth £260,000
- You repay 20% of £260,000 = £52,000
- You pay back £12,000 more than you borrowed — but you also gained £60,000 in equity on your 80% share
If property values fall, you repay less than you borrowed — but you also have less equity overall.
Partial repayments (staircasing) must be a minimum of 10% of the outstanding equity loan. Before each repayment — full or partial — you must:
- Contact Target HCA (targetHCA.co.uk) to confirm the process
- Appoint a RICS-accredited surveyor to provide a Royal Institution of Chartered Surveyors (RICS) valuation (not a mortgage valuation — a separate valuation instruction)
- Pay the surveyor's fee (typically £200–£600)
- Use the valuation to calculate the repayment amount
Selling Your Home with a Help to Buy Loan
When you sell the property, you must repay the equity loan from the sale proceeds. The amount is calculated at the point of sale:
- Repayment = loan percentage × sale price
- Example: 20% loan, sold for £320,000 → repay £64,000
The loan is secured as a second charge on your property (after your main mortgage). Your solicitor will handle the repayment from the sale proceeds at completion. You cannot sell without repaying the equity loan.
If you sell for less than the original purchase price, you repay the loan percentage of the lower sale price — so in a falling market you repay less in cash terms, but you may not have enough equity left after the mortgage to do so. In extreme cases, this can create negative equity situations.
Remortgaging with a Help to Buy Equity Loan
You can remortgage a Help to Buy property, but there are important restrictions:
- You must notify Target HCA before changing your mortgage — they must consent to the new mortgage
- You cannot increase your mortgage beyond the original mortgage amount without simultaneously paying down part of the equity loan (called a "further advance" restriction)
- You can switch to a new deal with the same or a different lender, on a like-for-like basis, without repaying the equity loan
- Not all lenders will lend on Help to Buy properties — confirm your new lender accepts Help to Buy before applying
Target HCA can be contacted via their online portal at targetHCA.co.uk or by phone. Always keep them informed of any changes to your mortgage — failing to do so can be a breach of your loan terms.
What If You Cannot Repay?
The equity loan is secured as a second charge on your property. If you are unable to repay the loan — either when selling or on demand — the government retains this security interest. In practice, the loan must be repaid when you sell, repay your main mortgage, or the property is repossessed.
If you are struggling with management fees from year 6, contact Target HCA as soon as possible. There may be options to defer fees in exceptional hardship cases, though this is not a standard entitlement.
Alternatives for New Buyers in 2026
Since Help to Buy ended, the government has introduced and maintained several alternative schemes for buyers in 2026:
First Homes Scheme
Newly built homes sold at 30–50% discount to eligible local first-time buyers and key workers. Discount stays with the property in perpetuity.
Shared Ownership
Buy 10–75% of a home and pay subsidised rent on the rest. Staircase to full ownership over time. Lower deposit required.
Lifetime ISA (LISA)
Save up to £4,000/year and receive a 25% government bonus (up to £1,000/year) for first home purchases up to £450,000.
Mortgage Guarantee Scheme
Government guarantees allow lenders to offer 95% LTV mortgages on properties up to £600,000. Subject to availability.