A guide to remortgaging and repaying your Help to Buy equity loan

Help to Buy equity loan: what happens when it’s time to repay?

If you bought a new-build home using a Help to Buy equity loan, you may be approaching the point where you need to think about repayment. Many homeowners remortgage around the end of the initial interest-free period (or earlier) to clear the equity loan and move forward with a mortgage structure that suits their plans.

This guide explains how the Help to Buy equity loan works, why remortgaging to repay it is common, and what the repayment process typically involves.

How a Help to Buy equity loan works (key points)

The Help to Buy scheme provided an equity loan alongside your mortgage. Instead of borrowing the full purchase price from a lender, you received an equity stake from the scheme, with your mortgage covering the remainder.

While the exact details depend on your agreement, the typical features include:

• You took a mortgage for the main loan amount and an equity loan for the remainder.
• The first 5 years are usually interest-free on the equity loan.
• After the interest-free period, you generally pay monthly interest on the equity loan (often on an interest-only basis).
• The amount you repay is linked to the property’s current market value when you redeem the equity loan, rather than the original amount you borrowed.

Because the repayment amount is linked to current value, the timing of repayment can matter.

Why homeowners remortgage to repay a Help to Buy equity loan

There are several practical reasons people choose to remortgage and repay their equity loan.

1) Reduce ongoing costs

Once the interest-free period ends, the equity loan can create an additional monthly cost. Repaying the equity loan removes that ongoing charge.

2) Simplify ownership and mortgage arrangements

Clearing the equity loan means the scheme no longer holds an interest in your property. That can make your finances easier to manage and may reduce complexity when you come to move or refinance later.

3) Improve mortgage options

Some lenders may have additional requirements where a Help to Buy equity loan remains outstanding. Repaying it can help you access a wider range of remortgage options.

4) Respond to changes in property value

If your home’s value has increased since purchase, the amount you repay for the equity loan can increase too. Many homeowners consider repaying sooner to limit exposure to further value growth.

The remortgage and repayment process: what typically happens

Remortgaging to repay a Help to Buy equity loan is usually a coordinated process between your mortgage lender, the Help to Buy scheme, and your solicitor.

While every case differs, the broad stages are often similar.

Step 1: Arrange a property valuation

To work out the repayment figure, you’ll typically need a formal valuation carried out by an appropriate valuer (often referred to as an RICS valuation in this context).

This valuation is used to estimate the property’s current market value, which then informs the repayment calculation.

Step 2: Complete the Help to Buy repayment process

After the valuation is in place, you’ll submit the relevant repayment request to the Help to Buy scheme along with the required information.

The scheme then issues a redemption figure/letter confirming the amount required to repay the equity loan.

Step 3: Set up your remortgage

In parallel, you’ll progress your remortgage application with a lender. Your mortgage offer and completion timetable will need to align with the redemption timetable so funds are available when the equity loan is redeemed.

Step 4: Legal redemption and completion

Your solicitor will handle the legal aspects of redeeming the equity loan and ensuring the remortgage completes correctly.

In many cases, completion is timed so that the new mortgage and the equity loan repayment happen together, minimising disruption.

Common questions people ask about Help to Buy repayment

Can I repay before the 5-year interest-free period ends?

In many cases, it’s possible to repay earlier than the end of the interest-free period. Repaying sooner can reduce the time you pay interest on the equity loan, but the repayment amount will still be based on the property’s current market value at the time of redemption.

What if the property value has fallen?

The repayment amount is still generally calculated using the property’s current market value at redemption. If the value has decreased, the redemption figure may be lower than it would have been at purchase.

Can I remortgage without repaying the equity loan?

Some homeowners consider remortgaging while leaving the equity loan in place, but lender acceptance and the scheme’s requirements can affect what’s possible. In practice, repaying the equity loan is often the cleanest route to achieve the mortgage outcome they want.

Planning points to consider before you remortgage

Remortgaging to repay a Help to Buy equity loan is often less about choosing a deal and more about coordinating timing, valuation, and redemption.

Useful planning considerations include:

• Timing your valuation and redemption so it aligns with your mortgage deal end date.
• Understanding how property value affects the repayment figure.
• Allowing time for paperwork and legal processes between the mortgage offer and completion.
• Checking lender requirements for cases where an equity loan is involved.

Mortgage advice and Help to Buy redemption: why coordination matters

Because the repayment figure depends on valuation and the redemption process involves specific steps, it’s important that your remortgage plan fits the Help to Buy timetable.

An adviser can help you consider the most suitable remortgage structure, while your solicitor and the Help to Buy scheme manage the redemption mechanics.

Important notes

• This guide is for general information and does not replace advice on your individual circumstances.
• Mortgage advice fees and the exact costs involved in any remortgage or redemption can vary.
• Missing mortgage payments can put your home at risk of repossession.