It's a percentage, not a fixed amount
This is the single most important thing to understand about your Help to Buy equity loan: you didn't borrow a fixed amount of money. You borrowed a percentage of your property's value.
When you bought your home, the government lent you 20% (or 40% in London) of the purchase price. If you bought at £250,000 with a 20% loan, that was £50,000. But if your property is now worth £310,000, you owe 20% of £310,000 = £62,000 to redeem.
The government's share rises and falls with your property value. When your home goes up in value, you benefit on the 80% (or 60%) you own — but the government benefits on their 20% (or 40%).
What this looks like with real numbers
Here are some typical scenarios showing how property growth affects your equity loan value:
| Purchased at | Loan % | Original loan | Current value | Loan now | Change |
|---|---|---|---|---|---|
| £200,000 | 20% | £40,000 | £260,000 | £52,000 | +£12,000 |
| £250,000 | 20% | £50,000 | £310,000 | £62,000 | +£12,000 |
| £300,000 | 20% | £60,000 | £380,000 | £76,000 | +£16,000 |
| £400,000 | 40% | £160,000 | £480,000 | £192,000 | +£32,000 |
The 40% London loan example is particularly striking: a £32,000 increase on the redemption amount, driven entirely by property growth.
Why this catches people out
Most people remember the original loan amount — "I borrowed £40,000" — and assume that's what they owe. The percentage-of-current-value calculation comes as a shock when they try to redeem.
“How do we pay off help to buy now the value and subsequently how much we owe them has risen so much?”
“I borrowed about £40k, now represents about £70k. We will never repay in the 13 years we have left on the mortgage.”
The good news: even though you owe more to redeem, the remaining 80% of your property's growth is yours. A property that went from £250,000 to £310,000 gained £60,000 in value. Your equity loan went up by £12,000, but you gained £48,000 in equity on your share.
The bad news: you still need to access that equity to pay off the loan, which usually means remortgaging. See our remortgaging guide →
Interest calculation vs redemption calculation
This confuses almost everyone, so here's the distinction clearly:
- Interest payments are calculated on your equity loan percentage of the original purchase price. If you bought at £250,000 with 20%, interest is based on £50,000 regardless of what your property is worth now.
- Redemption amount is calculated on your equity loan percentage of the current property value (determined by RICS valuation). If your property is now worth £310,000 with 20%, you'd pay £62,000 to redeem.
This means your interest payments stay the same even as your property grows, but the amount you'd need to pay to get rid of the loan increases. It's another reason not to delay redemption if you can afford it — the redemption amount rises with your property value.
What if your property has fallen in value?
If your property is worth less than what you paid, the equity loan works in your favour for redemption — you'd owe less than the original loan amount. But this situation usually comes with other problems:
- You may be in negative equity on your main mortgage, making remortgaging difficult
- Your total debt (mortgage + equity loan) could exceed the property value
- Selling might not cover both your mortgage and the equity loan
If you're in this situation, talk to a specialist broker. There may be options available even with limited equity.
How to check your current loan value
You can get a rough estimate right now:
- Check your property's estimated value on Zoopla or Rightmove
- Multiply by your equity loan percentage (20% or 40%)
- That's approximately what you'd need to pay to redeem
For an official redemption figure, you'll need a RICS valuation (£300-600). But for planning purposes, the online estimate gives you a reasonable ballpark.
Use our calculator to see your current loan value, interest costs, and options →