Help to Buy: Equity Loan
You can no longer apply for a Help to Buy: Equity Loan for properties in England.
Find out about other ways to get financial help from the government to buy a home.
You can still .
If you bought your home with a Help to Buy: Equity Loan
You鈥檒l need to:
- pay interest on your equity loan
- pay a management fee
- repay your loan
How much you need to pay in interest and loan repayments depends on the equity loan percentage you borrowed.
Example
| Property purchase price | Equity loan percentage | Equity loan amount borrowed |
|---|---|---|
| Bought for 拢200,000 | Borrowed 20% | 拢40,000 |
The equity loan percentage used to calculate your interest and repayments is 20%.
Interest payments
You do not have to pay interest for the first 5 years. In the sixth year, you鈥檒l be charged interest at a rate of 1.75%. This will be applied to the equity loan amount you originally borrowed (the equity loan percentage of the property purchase price). This annual interest is spread over the year in monthly payments.
Example
| Property purchase price | Equity loan percentage | Equity loan | Annual interest payment in year 6 (1.75% of the equity loan) | Monthly interest payment in year 6 |
|---|---|---|---|---|
| Bought for 拢200,000 | Borrowed 20% | 拢40,000 | 拢700 | 拢58.33 |
The interest rate increases every year in April, by adding the Consumer Price Index (CPI) plus 2%. If you bought your home with the earlier Help to Buy: Equity Loan (2013-2021) scheme, the interest rate increases by adding the Retail Price Index (RPI) plus 1%.
Your interest payments will decrease if you make a part repayment of the equity loan. This is because the amount the interest rate is applied to will reduce.
Fees
You鈥檒l need to pay a monthly management fee of 拢1 until you pay off the equity loan.
If you change your equity loan, including if you remortgage or make an equity loan repayment, you鈥檒l need to pay administration fees.
You鈥檒l also have to pay other fees associated with buying and owning a home, for example, legal and mortgage arrangement fees and for market value reports.
Paying interest and fees does not count towards paying back the equity loan. If you do not keep up with payments, you may need to pay recovery costs or interest on the amount you owe.
Paying back the equity loan
You can pay back part or all of your equity loan at any time.
Repayments are based on your equity loan percentage and the market value of your home at the time you want to make a repayment.
You鈥檒l need to get a market valuation report from a chartered surveyor when you make a repayment.
Read more detailed guidance on repaying your equity loan.
Paying back part of your equity loan
The smallest repayment you can make is 10% of the market value of your home.
Paying back part of your equity loan will reduce the monthly interest payments you鈥檒l need to pay from the sixth year of taking out the equity loan.
Example
| Market value of your home | Equity loan percentage | Amount |
|---|---|---|
| Bought for 拢200,000 | Borrowed 20% | 拢40,000 |
| Value at time of repayment 拢220,000 | Paying back 10% | 拢22,000 |
Your remaining equity loan is 10% of the market value of your home.
From the sixth year, you鈥檒l be charged interest monthly at a rate of 1.75% on 10% of the original property purchase price. The interest rate will increase every year in April, by adding the Consumer Price Index (CPI) plus 2%.
Paying back all your equity loan
You must repay all your equity loan when you:
- reach the end of the equity loan term (normally 25 years)
- pay off your repayment mortgage
- sell your home
You may also be asked to repay the equity loan in full if you do not keep to the terms and conditions.
If you sell your home, you鈥檒l pay the equity loan percentage of the market value or agreed sale price if it鈥檚 higher.
Example
| Market value of your home | Equity loan percentage | Amount |
|---|---|---|
| Bought for 拢200,000 | Borrowed 20% | 拢40,000 |
| Value at time of full repayment 拢250,000 | Paying back 20% | 拢50,000 |
If you want to pay off your equity loan and you鈥檝e previously made part repayments, you鈥檒l pay the equity loan percentage you still owe of the market value.
Example
| Market value of your home | Equity loan percentage | Amount |
|---|---|---|
| Bought for 拢200,000 | Borrowed 20% | 拢40,000 |
| Value at time of part repayment 拢220,000 | Paying back 10% | 拢22,000 |
| Value at time of full repayment 拢240,000 | Paying back 10% | 拢24,000 |
Manage your Help to Buy loan
Read guidance on how to:
- remortgage your Help to Buy home
- make structural alterations to your Help to Buy home
- sublet your Help to Buy home
- change ownership of your Help to Buy home
Get help
Contact the Help to Buy customer service team for help managing your equity loan.
Help to Buy customer services
[email protected]
Telephone: 0300 123 4123
Find out about call charges
Help to Buy customer services
PO Box 5262
Lancing
BN99 9HE
You can also read the Help to Buy: Equity Loan homebuyers鈥� guide.