Charges and Repaying your Help to Buy Equity Loan
When you purchase your home you will pay an inital monthly management fee of £1.00 from the start of the equity loan which will continue until the loan is repaid.
The equity loan will be interest free for the first five years; from year six an administration charge applies which increases annually by RPI + 1% from year seven. Please note; you are not repaying the loan by paying this administration charge.
The total amount you’ll pay back on the equity loan relates to the property’s market value at the time of repayment. If you took out a 20% equity loan, the amount you pay back will be 20% of the current value of your property. So if the value of your homes goes up, the amount you pay back, also goes up. If the value of your home goes down, the amount you pay back also goes down, so you are protected if property prices fall after you buy.
You must pay back your equity loan within 25 years (or when your mortgage term ends, if it is less than 25 years) or when you sell your home, whichever is sooner. There are no penalties for early repayment of your equity loan. You cannot transfer an existing loan to a new property.
The government's Help to Buy Buyers Guide will give you more information on repaying the loan and examples of how much you can expect to pay for the administration fee from year six.
Who do I contact once I’ve bought my home through the equity loan scheme?
Once your sale is complete, your details are transferred to the Help to Buy Mortgage Administrator – Target HCA.
Target HCA provides a single point of contact to:
- Administer the payment of fees by buyers on the equity loans after five years of ownership.
- Recover the equity loans repayments as owners sell and move on or staircase (‘staircasing’ is the term for the partial repayment of your equity loan).
- Provide advice and approval for exceptional cases relating to subletting, remortgaging, and requests for additional borrowing