The thing most people don't realise until it's too late
When you took out your Help to Buy equity loan, you borrowed a percentage of your purchase price. That percentage — typically 20% in England, or up to 40% in London — is the thing that matters. Not the amount you borrowed. The percentage.
When you come to repay, you don't repay the original cash figure. You repay the same percentage of your property's current value.
“We bought at 300k, it's now worth 375k. That means our 20% loan went from 60k to 75k. Where did that extra 15k come from? We didn't borrow it.”
This is the single most important thing to understand about Help to Buy. The government shares in your property's upside. If your home has appreciated, your equity loan repayment is higher than what you originally borrowed. In many cases — especially in areas with strong house price growth — this comes as a genuine shock at redemption time.
Worked examples: different appreciation rates over 5 years
Starting property value: £300,000. Equity loan: 20% = £60,000. London column assumes a 40% loan (£120,000).
| Growth rate | Property value (yr 5) | 20% loan repayment | Property gain | Extra owed on loan | London 40% repayment |
|---|---|---|---|---|---|
| 0% / year | £300,000 | £60,000 | — | £0 | £120,000 |
| 2% / year | £331,224 | £66,245 | +£31,224 | +£6,245 | £132,490 |
| 5% / year | £382,884 | £76,577 | +£82,884 | +£16,577 | £153,154 |
| 10% / year | £483,153 | £96,631 | +£183,153 | +£36,631 | £193,261 |
Figures use compound annual growth. Loan repayment is the equity loan percentage applied to the current property value at year 5. Does not include monthly interest charges. Calculate your personal figures →
The pattern is clear: even modest house price growth adds thousands to your repayment. At 5% annual growth — roughly in line with the UK long-term average — a borrower with a £60,000 equity loan would owe £76,577 at year 5. That's £16,577 more than they originally borrowed, without taking on any additional debt.
Regional differences: London is a different world
Outside London, the standard Help to Buy equity loan was 20% of the purchase price. In London, it was up to 40%. This doubles the impact of everything in this guide.
On a £400,000 London new build (well within the Help to Buy price cap), a 40% equity loan means £160,000 borrowed. If that property is now worth £500,000, the repayment isn't £160,000 — it's £200,000. A £40,000 increase without any additional borrowing.
London house prices have historically grown faster than the national average, compounding the effect further. Borrowers who took the maximum 40% loan in high-growth London boroughs in 2016–2021 may be looking at very significant increases in their effective redemption figure.
For more on how to calculate your current loan value, see how much is my Help to Buy loan worth now? →
The flip side: what happens if your property drops in value
The appreciation dynamic works in both directions. If your property value falls, your equity loan repayment falls with it. On a £300,000 property with a £60,000 loan, if the property is now worth £270,000, you'd repay £54,000 — £6,000 less than you originally borrowed.
The government shares your downside as well as your upside. Some borrowers use this as an argument for keeping the Help to Buy loan — you're effectively hedging a portion of your property risk. If prices fall, your biggest asset (your home) falls in value, but your biggest liability (the equity loan) falls too.
This reasoning has some merit in the short term, but it's worth being clear about what it means: you still lose money if the property drops. You just lose slightly less of your own money, because some of the loss falls on the government's stake. It's not protection — it's shared pain.
The new build premium: why your loan might shrink in years 1–2
New builds often command a premium at the point of sale — buyers pay more for a brand-new property than an equivalent older one. This premium can be significant: industry estimates typically put it at 10–20% above the equivalent resale value.
What this means in practice: your Help to Buy equity loan is calculated on a price that may include a substantial new build premium. If you tried to sell in the first couple of years — before the property establishes a resale market track record — the RICS valuation might actually come in below your purchase price. Your equity loan repayment would be lower as a result.
This is one reason some Help to Buy borrowers who sell early find their redemption figure is lower than expected. The flip side is that they've also made less (or a loss) on the property itself.
The new build premium effect usually reverses over time as the property gets older and the wider market around it rises. But it's worth understanding in the first 2–3 years, particularly if you're considering selling early.
Real examples from forums:
- "We bought our new build at £280k in 2019. By 2021 it was worth £355k — £75k gain in two years. Our 20% H2B loan went from £56k to £71k. Still a great outcome, but we had to factor in the extra £15k on repayment."
- "Five years in, our place has only gone up 11%. Inflation has eaten most of that in real terms. The loan hasn't grown massively but we also haven't built much equity."
What this means for your decisions
Understanding the appreciation effect changes how you think about timing your exit from Help to Buy:
- The sooner you repay, the less you repay — in an appreciating market. Every year you wait, the loan balance (as a cash figure) grows. If you plan to repay eventually, acting earlier costs you less.
- Your annual RICS valuation figure is key — if you're planning a partial repayment (staircasing), the current property value determines what you pay. Keep an eye on local market conditions.
- The loan isn't just interest costs — when people calculate the total cost of Help to Buy, they often forget to factor in that the capital repayment grows. The monthly interest is visible; the growing repayment figure is invisible until the day you redeem.
For a full picture of whether to pay off your loan now or later — including the interest cost component alongside the appreciation effect — see should you pay off your Help to Buy loan or keep it? →
→ Use the calculator to see how your property value affects your repayment