Repaying a Help to Buy Equity Loan When You Sell or Remortgage

Between 2013 and 2023, well over 380,000 households in England bought a home using a Help to Buy equity loan. Many of those buyers, particularly the large cohort who bought new builds across Stockport, Tameside and south Manchester in the scheme’s later years, are now reaching the point where they want to move, remortgage or simply own their home outright.

That is where the equity loan stops being a background detail and becomes the most important document in your transaction. Repaying it is not difficult, but it has its own process, its own paperwork and a set of deadlines that catch people out. This guide explains how it works and how your conveyancer manages it alongside the rest of your sale or remortgage.

A Quick Recap: What You Actually Owe

The Help to Buy equity loan was not a fixed sum. The government, through Homes England, lent you a percentage of your home’s purchase price, usually 20% outside London, in return for the same percentage share of its value when you repay.

This is the point that surprises people. If you bought for £250,000 with a 20% loan of £50,000 and your home is now worth £300,000, you repay £60,000, not £50,000. If the value has fallen, you repay less. The loan tracks the property, not the original cash.

Two other features matter:

• Interest started in year six. The loan was interest-free for the first five years. From year six, interest is charged at 1.75% of the original loan amount, rising every April in line with inflation plus a margin (RPI plus 1% for loans taken out before April 2021, CPI plus 2% for later loans). Interest is paid monthly on top of your mortgage and does not reduce the loan itself. There is also a small monthly management fee.
• Homes England holds a second charge. Behind your mortgage lender on the Land Registry title sits a charge in favour of Homes England. Nothing can be sold or remortgaged without that charge being dealt with, which is why a conveyancing solicitor has to be involved in every repayment.

When Do You Have to Repay It?

You must repay the equity loan in full when you sell the property, at the end of the loan term (usually 25 years), or when your main mortgage ends, whichever comes first. You can also repay voluntarily at any time, either in full or in chunks of at least 10% of the property’s value, a process known as “staircasing”.

There is no requirement to repay when you remortgage, but your new lender will need Homes England’s consent to sit ahead of their charge, and many homeowners choose to clear the loan at that point using the equity they have built up. If you are weighing this up, our guide to the conveyancing process for a remortgage explains what the legal work involves.

How the Repayment Is Calculated

The figure you repay is your loan percentage applied to the higher of your home’s current market value or the agreed sale price. Homes England will not accept an estate agent’s appraisal or a mortgage lender’s valuation for this purpose. You need a formal valuation from a RICS registered valuer, carried out specifically for Help to Buy redemption.

The valuer must inspect the property, provide comparable evidence, and produce a report in the form Homes England requires. Expect to pay in the region of £150 to £300, and note that a homebuyer survey or building survey is not a substitute. If you are unsure of the difference, our guide to the types of homebuyer surveys sets out what each one is for.

Worked example: you bought a new build in Bredbury for £240,000 in 2019 with a 20% loan of £48,000. You have agreed a sale at £285,000 and the RICS valuation comes in at £280,000. The higher figure is the sale price, so you repay 20% of £285,000, which is £57,000, plus any outstanding interest or arrears, plus the administration fee.

The Redemption Process, Step by Step

1. Instruct your conveyancer early. Tell us at the outset that the property has a Help to Buy loan. It changes the sequence of the transaction and we will need to be named on your Homes England application.
2. Commission the RICS valuation. Do this as soon as you decide to sell or remortgage. The report is only valid for three months, so timing matters (see below).
3. Complete the Homes England repayment application. The Loan Redemption Form asks for your details, your conveyancer’s details and your authority for us to act. If you are selling, you also need to send a copy of the memorandum of sale from your estate agent.
4. Pay the administration fee. Homes England charges £200 to process a full or partial repayment. Your application will not move until it has been paid.
5. Receive the redemption letter. Homes England confirms the exact amount due, including interest and fees. We need this letter before we can complete.
6. Completion and discharge. On completion day, the repayment is sent from the sale proceeds or your new mortgage advance. Homes England then releases its charge and we register the change at the Land Registry. Our guide to completion day and how to prepare for it covers what happens on the day itself.

The Timing Traps That Delay Help to Buy Sales

The three-month valuation window. This is the single most common problem. If your sale takes longer than three months from the date of the valuation, and many do, Homes England will require a fresh valuation or a desktop update, at your cost, before issuing a new redemption letter. Given that selling a house in the UK often takes four to six months, think carefully about when to commission the report. In a straightforward sale we generally suggest instructing the valuer once you have an offer accepted rather than when you first list.

The redemption letter and the chain. Your buyer’s solicitor will not exchange until they know the Homes England charge will be released. If your redemption letter has not arrived, the whole property chain waits. Building in time for Homes England’s processing is essential.

Remortgaging without repaying. If you want to keep the equity loan and switch lenders, you need a new RICS valuation anyway and Homes England must agree to a deed of postponement. Not all lenders offer mortgages on properties with an equity loan still in place, so speak to your broker before you commit to a rate.

Adding a partner to the title. A transfer of equity on a Help to Buy property requires Homes England’s consent and the new owner must meet the scheme’s eligibility criteria. It cannot simply be done alongside a remortgage without their involvement.

Selling at a loss. If your home is worth less than you paid, you repay a smaller sum, but you cannot walk away from the mortgage shortfall. If you are in this position, talk to us before you market the property.

Is It Worth Repaying Early?

For many homeowners now in years six to ten of their loan, the answer depends on the interest cost against the cost of borrowing more on the mortgage. Interest on the equity loan rises every April, and because it is charged on the original loan amount rather than reducing over time, it can start to feel expensive relative to a standard mortgage. On the other hand, if property prices in your area are rising, repaying sooner fixes the government’s share at today’s value rather than a higher one later.

We are conveyancers rather than financial advisers, so we will not tell you whether to repay. What we can do is run the legal side of a staircasing or full redemption smoothly once you have decided, and coordinate with your broker so the valuation, redemption letter and mortgage offer all line up.

How Gorvins Residential Can Help

We handle Help to Buy redemptions as part of sales, remortgages and standalone staircasing applications for homeowners across Stockport and Greater Manchester. Many of the properties involved are the new build estates we helped buyers purchase in the first place, so we know the developments and the paperwork well. If you are also buying onward, our guide to buying a new build property and what to watch out for may be useful, and if you are stepping down the ladder rather than up, see our guide to what downsizing involves and whether it is right for you.

To discuss your Help to Buy sale or remortgage, call us on 0161 930 5350 or email enquiries@gorvinsresi.com for a no-obligation quote.