When do I start paying interest on my Help to Buy equity loan?

You start paying monthly interest from the fifth anniversary of your equity loan, at the beginning of year 6, whether or not you have received a letter about it. There is no grace period beyond the original five years, and the switch to interest is not something the government administrators wait for you to notice. If you already have a Direct Debit set up for your £1 monthly management fee, that same Direct Debit is used automatically for interest payments once they start, according to GOV.UK and Homes England guidance updated 2 September 2026. If you do not currently have a Direct Debit in place, you'll need to set one up before your fifth anniversary to avoid falling behind. Check your exact completion date on your original mortgage offer or Help to Buy paperwork, since that date, not the calendar year, is what determines when your five years are up. Diary a reminder six months before that date rather than waiting for a letter to arrive.

How much interest will I pay on my Help to Buy loan in year 6?

In year 6, your interest rate is fixed at 1.75% of the equity loan amount you originally borrowed, calculated as your purchase price multiplied by your equity loan percentage. On a typical £44,000 Help to Buy loan, that works out at £770 a year, or £64.17 a month, on top of your ordinary mortgage payment and the £1 monthly management fee you have been paying since completion, according to GOV.UK and Homes England guidance updated 2 September 2026. This amount is fixed only for year 6. From year 7 onward, the rate rises every April, so £64.17 is the lowest monthly interest payment you will ever make on the loan, not a stable ongoing cost. Work out your own year 6 figure by multiplying your original equity loan amount by 1.75% and dividing by 12, and budget for it rising every year after that.

How much do I have to repay on my Help to Buy equity loan?

You repay the same percentage you originally borrowed, but applied to your home's current market value at the time of repayment, or the agreed sale price if that is higher, not the original amount you borrowed in pounds. If you borrowed 20% and your home has risen in value since you bought it, you will repay more in cash terms than you originally borrowed. If it has fallen, you will repay less. The smallest partial repayment, known as staircasing, that you can make is 10% of your home's current market value, so you cannot chip away at the loan a few hundred pounds at a time. You must repay in full when you sell, when you pay off your residential mortgage, or at the end of the 25-year loan term, whichever comes first. Get a RICS valuation before assuming you know your figure, since national house price averages tell you very little about what your specific property is worth right now.

How much does it cost to repay a Help to Buy equity loan?

Budget for two separate costs before any money comes off the loan itself. You will need an independent RICS valuation report, which typically costs from around £200 including VAT depending on your surveyor and location, and a separate £200 administration fee paid to the government administrators to process the redemption, according to HomeOwners Alliance guidance updated March 2026. Your valuation report is only valid for 3 months from the date it is produced and must be sent to the administrators within 5 working days of being issued, so time it deliberately rather than getting it done too early. You will also need a conveyancing solicitor to handle the legal side of the redemption, which adds further fees on top. None of these costs come off your equity loan balance itself, so treat them as a separate upfront bill you need to have ready before you start the process, not something deducted from what you owe.

£770 a year: what your Help to Buy loan costs from year 6

Five years ago you signed the Help to Buy paperwork, breathed a sigh of relief that the deposit gap was finally closed, and probably never looked at the scheme rules again. If a letter has just landed from Homes England or your loan administrator mentioning "interest payments," or you've simply worked out that your fifth anniversary is close, that quiet cliff edge you barely thought about at completion is about to start costing you money every single month.

Here's the number that matters: from the sixth year of your equity loan, you start paying monthly interest at 1.75% of what you originally borrowed, and on a typical £44,000 Help to Buy loan that's £770 a year, or £64.17 a month, taken by Direct Debit on top of your existing mortgage (GOV.UK/Homes England, updated 2 September 2026). It doesn't go towards repaying the loan. It's simply the cost of still owing the money.

What actually happens on your fifth anniversary

The first five years of a Help to Buy equity loan are genuinely interest-free, and the only thing you've paid throughout is a £1 monthly management fee. That changes from the start of year 6, when interest payments begin automatically, calculated as your original equity loan amount (purchase price multiplied by the percentage you borrowed) times 1.75%, divided by 12 for a monthly figure. On a home bought for £220,000 with a 20% equity loan, that's a £44,000 loan, £770 a year in year 6, and £64.17 a month (GOV.UK/Homes England, updated 2 September 2026). If you already pay your £1 management fee by Direct Debit, the same instruction is used automatically for interest once it starts; if you don't, you'll need to set one up.

So if you completed your Help to Buy purchase in 2020 or 2021, this isn't a future problem to plan around. It's happening to your bank balance right now, whether or not anyone has told you.

Why the rate keeps climbing every April, even in a low-inflation year

Year 6's 1.75% rate doesn't stay put. Every April, it rises by the rate of inflation plus a fixed margin, and which measure applies depends on when you bought: the Help to Buy: Equity Loan (2013-2021) scheme uses the Retail Price Index plus 1%, while the Help to Buy: Equity Loan (2021-2023) scheme uses the Consumer Price Index plus 2% (GOV.UK/Homes England, updated 2 September 2026). With RPI at 3.2% and CPI at 2.9% in the year to July 2026 (ONS, published August 2026), that means a margin of roughly 4.2% or 4.9% respectively is added on top of last year's rate, not the original 1.75%. Using today's figures purely as an illustration of the mechanism, a £44,000 loan on the older RPI-linked scheme would see its year 7 rate rise to around 1.82%, worth about £802 a year, while the newer CPI-linked scheme would rise to roughly 1.84%, worth about £808 a year. Crucially, GOV.UK is explicit that your rate keeps rising every year from year 6 onward even when inflation is zero or negative, because the fixed 1% or 2% margin still applies on top of it. So even if inflation falls back to the Bank of England's 2% target and stays there, your rate is still guaranteed to rise a little further every April for as long as you hold the loan, and there's no version of this scheme where the interest bill simply flattens out on its own.

The repayment bill is based on today's value, not what you borrowed

This is the part that catches people out. When you repay part or all of your equity loan, you don't hand back the £44,000 (or whatever you originally borrowed). You repay the same percentage, applied to your home's current market value at the time of repayment, or the agreed sale price if that's higher (GOV.UK/Homes England, updated 2 September 2026). Say you bought for £220,000 with a 20% loan. If your home is independently valued at £245,000 today, you'd repay 20% of that: £49,000, or £5,000 more than you borrowed. If it's valued at £210,000 instead, you'd repay £42,000, £2,000 less than you borrowed. The percentage never changes; the cash amount moves with the property.

Whether that works for or against you right now depends heavily on where you live. HM Land Registry's UK House Price Index still shows annual growth of 2.0% to June 2026, Nationwide put annual growth at a slower 1.6% in August, and Lloyds' faster-moving House Price Index recorded the UK's first annual price fall since November 2023 in the same month, down 0.4% to an average of £298,468 (Land Registry/ONS UK HPI, June 2026; Nationwide House Price Index, published 1 September 2026; Lloyds House Price Index, published September 2026). So the exact same 20% share can end up costing you thousands more or thousands less than you borrowed, and the only way to know which applies to you is to get your own home valued, not assume a national headline tells you anything useful.

What it actually costs to get a valuation and repay

Budget for real costs before any money comes off the loan itself. A Help to Buy RICS valuation report typically costs from around £200 including VAT, depending on your surveyor and location, and it's worth getting more than one quote (HomeOwners Alliance, updated March 2026). That report is only valid for 3 months from the date it's produced and must be sent to the government administrators within 5 working days of being issued, or you'll need a further desktop revaluation to extend it. On top of that, there's a separate £200 administration fee to process the redemption itself, plus your usual conveyancing solicitor's fees, similar to the completion-day costs covered in our new homeowner checklist. The smallest partial repayment you can make, known as staircasing, is 10% of your home's current market value, so this isn't a scheme you can chip away at a few hundred pounds at a time.

So budget at least a few hundred pounds in valuation and admin costs before you see a penny come off the loan, and time the valuation deliberately once you're ready to act, rather than letting it lapse and paying for a second one.

Your Help to Buy timeline from here:

Now, if you're within 6 months of your fifth anniversary: confirm your exact completion date with your loan administrator and check your Direct Debit, since interest starts automatically at the beginning of year 6.
From the fifth anniversary (start of year 6): monthly interest begins at 1.75% of your original equity loan amount, on top of the £1 monthly management fee.
Every April from year 7 onward: your rate rises by RPI+1% (2013-2021 scheme) or CPI+2% (2021-2023 scheme), whichever applies to you, whether or not inflation is falling.
Whenever you choose to repay, in part or in full: book a RICS valuation (from around £200, valid for 3 months), submit it within 5 working days, pay the £200 administration fee, and repay at least 10% of current market value if repaying in part.
At the end of the 25-year term, when you clear your mortgage, or when you sell: full repayment becomes compulsory regardless of how much interest you've already paid.

What this means for you

The maths points toward treating your fifth anniversary as an action point, not a formality. Interest keeps rising every April regardless of what happens to inflation, and national price growth is currently flat to mixed across every major index, which means this isn't obviously a moment when waiting makes your repayment bill smaller. Get a proper valuation now so you know your real number rather than guessing from a headline. If the cash you'd use to repay would otherwise sit in an ordinary savings account, run the comparison the same way our overpay-or-save decision piece does for a standard mortgage: a repayment removes a cost that's guaranteed to keep rising, not one that simply tracks a savings rate, so work out which one actually leaves you better off before assuming either answer. If you're also approaching a remortgage, our remortgage prep guide covers combining that conversation with your broker, since redemption timing can change your new mortgage figures. And if you were instead planning to put spare cash toward a project from our improvement guide, weigh that against a loan whose cost only moves in one direction. Most people who run these numbers properly end up getting the valuation done within weeks of their fifth anniversary, not years after it, because the alternative is paying an ever-rising interest bill for no return at all.