Help to Buy After 5 Years: When the Interest Starts
Your Help to Buy equity loan is interest-free for the first five years. From the start of year six, monthly interest fees begin and then rise every year.
The loan itself does not have to be repaid at that point — it runs until you sell, pay off your main mortgage, or reach the end of the term — but the fees are a real new cost, so most owners use the five-year mark to decide their next move. Your realistic options are to keep paying the fees, remortgage to repay the loan, staircase (repay part of it), or sell.
At a glance
- Interest-free period
- First 5 years
- Then
- Monthly interest fees begin
- Fees
- Rise every year
- Main options
- Repay, remortgage, staircase or sell
Key Takeaways
- Interest starts in year six — the loan is fee-free for five years, then a monthly interest fee begins and increases each year.
- The loan does not automatically fall due — you can keep it running and just pay the fees, but the cost grows over time.
- You repay a share of value, not a fixed sum — because the equity loan is a percentage of your home's worth, rising house prices raise what you owe.
- Remortgaging is the most common exit — many owners refinance to buy out the government's share once they have enough equity for a competitive rate.
What Changes At The Five-Year Point
For the first five years you pay nothing on the equity loan beyond a small monthly management fee. From the start of year six, an interest fee kicks in. The important features to understand:
- The interest fee starts at a set percentage of the amount you originally borrowed and then rises each year in line with an inflation-linked measure, so it grows over time.
- These are fees on top of your normal mortgage payments — they do not reduce the loan balance. You could pay them for years and still owe the same percentage share.
- The exact rate and how it increases depend on which version of the scheme you are on, so the single most useful thing you can do is read your latest statement and check with your equity loan administrator.
We are deliberately not quoting a precise current rate here, because it varies by scheme and rises annually. Your statement is the authoritative source for what you personally will pay.
Your Four Main Options
1. Keep paying the fees
You can simply start paying the monthly interest fee and leave the loan in place. This needs no immediate action and no new borrowing.
The downside is that the fee rises every year, and you still owe a percentage of your home's value, so this is often a holding position rather than a long-term plan.
2. Remortgage to repay the loan
The most popular route. You take a larger mortgage on your main home and use the extra borrowing to repay the equity loan in full.
This works best once your property has enough equity to keep your loan-to-value sensible and your rate competitive. Model the numbers with our mortgage calculator and check what you could borrow with the mortgage affordability calculator.
3. Staircase (repay part of the loan)
If you cannot clear the whole thing, some schemes let you repay part of it — often in set minimum chunks. This reduces the percentage you owe and therefore the future fees.
Each repayment requires a RICS valuation, and if that valuation is high it raises the cost; see Help to Buy valuation too high.
4. Sell
When you sell, the equity loan is repaid from the proceeds as a percentage of the sale price. If your home has risen in value, the government's share has risen too. Selling clears the loan cleanly but obviously means moving on.
How Repayment Amounts Are Worked Out
Whichever route you choose, remember the loan is a share of value, not a frozen figure. If the government funded 20% of the purchase, you repay 20% of the current valuation — which could be more or less than the original cash amount depending on the market.
Use our house value calculator and local house prices to get a feel for where you stand before commissioning a formal RICS valuation.
Getting Ready To Remortgage
If remortgaging is your plan, prepare early. Lenders will assess affordability and your credit profile on the larger loan, so avoid new debts, keep payments clean, and gather your paperwork. Whether the sums work depends heavily on your equity and the rates you can access.
- All four agencies — in one report — Experian, Equifax, TransUnion & Crediva
- Spot the errors — and old debts that quietly get applications declined
- It's a soft search — so checking never leaves a mark on your file
- See what lenders see — the same information banks pull when they assess you
Free for 30 days, then £14.99 a month — cancel online anytime. Check the current price before subscribing. We may earn a commission if you sign up, at no extra cost to you.
Frequently Asked Questions
Do I have to repay the whole loan after five years?
No. After five years you start paying monthly interest fees, but the loan can stay in place until you sell, repay your main mortgage, or reach the end of the loan term. You choose whether to repay early.
How much are the interest fees?
They begin at a percentage of what you originally borrowed and rise each year by an inflation-linked amount. The exact figure depends on your scheme, so check your annual statement and your administrator rather than relying on a headline rate.
Can I pay off just part of the equity loan?
Often yes, through staircasing, usually in set minimum amounts. Each partial repayment needs a RICS valuation, and reduces the percentage you owe and the future fees.
Is remortgaging always the best option?
Not always. It depends on your equity, the rates available and your affordability. If you have limited equity, the numbers may not work, and keeping the loan while paying fees could be more sensible in the short term.
General information only, not financial advice. Equity loan terms vary by scheme and change over time — check your statement and speak to your administrator and a qualified adviser.
