The argument you don't often hear: keeping it might make sense
Most Help to Buy content is about how to get out of the equity loan as fast as possible. This guide makes the opposite case — honestly, with numbers — and then explains exactly when and why it falls apart.
The core argument: your Help to Buy loan starts at 1.75% interest in year 6. In a world where savings accounts pay 4–5%, fixed-rate mortgages cost 4–5%, and index funds return 7–10% annually, you are holding the cheapest money you will ever have access to. Paying it off might be the financially irrational move.
“Keeping HTB as cheap leverage while rates are high isn't the worst idea. But you need an exit plan, not just inertia.”
This is a legitimate position. But it has a shelf life — and the people who benefit from it are those who treat it as a deliberate strategy with a specific exit plan, not those who default into it because they haven't thought about it.
The maths: 1.75% debt vs 4%+ returns
In year 6, the numbers are stark. On a £60,000 equity loan:
Year 6 — keeping HTB vs paying it off:
- HTB interest cost: £88/month (£1,050/year)
- If you invested £60k in a 4.5% savings account: ~£225/month in interest (£2,700/year)
- Net annual benefit of keeping HTB: approximately £1,650/year
That's a genuine return. If you have the cash available to pay off the equity loan but don't, and you invest it instead at a higher rate, you come out ahead — at least in year 6.
The same logic applies if you'd need to borrow to repay. Taking a larger mortgage at 4.5% to eliminate a 1.75% debt is mathematically backwards. You're replacing cheap debt with expensive debt.
This is a genuine, valid argument — used by financially literate people who understand it. The problem comes when people use the argument without understanding its time limits.
The property hedge: sharing downside risk with the government
There's a second, less-discussed benefit of keeping the equity loan: you're sharing your property's downside with the government.
If your property value falls, your equity loan repayment falls proportionally. On a £300,000 property with a 20% equity loan, if prices drop 10% to £270,000, your repayment drops from £60,000 to £54,000. You still lose £30,000 on the property — but £6,000 of that loss is absorbed by the government's stake, not yours.
In an uncertain property market, this risk-sharing can be attractive. You're not fully exposed to the downside. For someone who bought at peak prices or in a potentially overvalued area, this shared risk is a genuine feature, not just a talking point.
The flip side: in an appreciating market, the government also shares your upside. Your rising property value increases your repayment. For a full analysis of how appreciation affects your loan, see how property appreciation affects your Help to Buy repayment →
Year-by-year: when the strategy starts to collapse
The leverage argument depends on the HTB rate staying below the rate you can earn or the rate you'd pay on a mortgage. Here's how the projections look over 10 years, assuming HTB rate escalates at ~4.5%/year, savings rates decline gradually, and mortgage rates trend lower:
| Year | HTB rate | Savings rate (est.) | Mortgage rate (est.) | HTB spread vs savings | Verdict |
|---|---|---|---|---|---|
| 6 | 1.75% | 4.50% | 4.50% | +2.75% | HTB clearly cheaper |
| 7 | 1.83% | 4.00% | 4.25% | +2.42% | HTB still cheaper |
| 8 | 1.91% | 3.75% | 4.00% | +2.09% | HTB still cheaper |
| 9 | 2.00% | 3.50% | 3.75% | +1.75% | Advantage narrowing |
| 10 | 2.09% | 3.25% | 3.50% | +1.41% | Advantage narrowing |
| 11 | 2.18% | 3.00% | 3.25% | +1.07% | HTB still below, but less compelling |
| 12 | 2.28% | 2.75% | 3.00% | +0.72% | Barely worth it |
| 13 | 2.38% | 2.50% | 3.00% | +0.62% | Question strategy now |
| 14 | 2.49% | 2.50% | 3.00% | +0.51% | Near-zero benefit |
| 15 | 2.60% | 2.50% | 3.00% | +0.40% | Strategy has collapsed |
Years 12+ highlighted. Savings and mortgage rate projections are illustrative — actual rates will vary. HTB rate assumes RPI+1% formula with ~3.5% RPI. The core insight holds regardless of exact figures.
The pattern is clear. In years 6–9, the strategy genuinely works. From year 10 onwards, the advantage narrows sharply. By year 12–15, the spread between HTB interest and what you could earn or save is negligible — and you still haven't reduced the capital balance by a penny.
The problem the strategy ignores: compounding and capital
The leverage argument focuses on annual rates. It tends to ignore two compounding dynamics that make it look much worse over time:
- The HTB rate compounds upward — it's not 1.75% forever. Each April, the rate increases by inflation+1% (or inflation+2%). The longer you keep it, the higher the rate climbs. A strategy based on "1.75% is cheap" breaks down when the rate reaches 2.5% or 3%.
- The capital grows with property value — even if you could justify paying 1.75% indefinitely, you're not paying 1.75% of a fixed number. If your property appreciates 20%, your repayment grows 20% too. The "cheap debt" gets more expensive in cash terms even before the rate rises.
Together, these mean the total cost of keeping the loan grows faster than most people expect. For the full picture of how these two factors interact, see should you pay off your Help to Buy loan or keep it? →
The costs the maths doesn't capture
Even if the numbers worked perfectly in your favour, there are real costs to keeping the equity loan that don't show up in a spreadsheet:
Restrictions on what you can do
While you hold a Help to Buy equity loan, you can't let the property without Homes England permission. You can't take in a lodger above certain limits. Certain modifications require Lenvi sign-off. These restrictions constrain how you use your own home — which has real value, even if it's hard to quantify.
The Lenvi factor
Lenvi (formerly Target HCA) is the company that administers Help to Buy equity loans. Their reputation among borrowers is... mixed. Slow to respond, bureaucratic, and the source of many delays in redemption processes. Every year you keep the loan, you're in a relationship with Lenvi. Some people factor this in; many don't until they're trying to redeem and hitting walls.
The psychological cost
You don't fully own your home while the equity loan exists. For many people, that matters — emotionally, and practically. The government has a registered charge on your property. Every time you think about your finances, the equity loan is there. For some borrowers, the peace of mind of full ownership is worth more than the mathematical advantage of cheap leverage.
When keeping the loan is a valid, deliberate strategy
Being clear about what this strategy actually requires to work:
- You are actively investing the difference — not just spending it. If you're keeping the loan because remortgaging is awkward, and you're not doing anything productive with the cash you're "saving," this isn't a strategy — it's inertia.
- You have a specific exit plan — a date, a trigger, a plan. "I'll keep it until I sell in 3 years" is a strategy. "I'll deal with it eventually" is not.
- Your timeline is short — 1–3 years. The numbers work in years 6–9 if you're comparing HTB interest to current mortgage rates. By year 10+, the spread has narrowed enough that the hassle, restrictions, and growing capital cost make it hard to justify.
- You're genuinely rate-constrained — if you'd need a very high mortgage rate to redeem, keeping the loan short-term while waiting for a better rate environment can make sense. But model the break-even point explicitly.
The verdict: valid short-term, terrible long-term
Keeping your Help to Buy loan as cheap leverage is a genuinely valid strategy for a minority of borrowers in a specific window: years 6–9, with a clear exit plan, actively investing the difference, and a timeline of 2–3 years.
For the majority of people who are "keeping it" — but without a specific plan, without investing the difference, and without a clear exit point — it's not a strategy. It's inertia dressed up as financial sophistication. And it gets more expensive every year.
Use the calculator to model your specific situation: how much HTB interest you'll pay year by year, what the equivalent mortgage cost would be, and when the crossover happens for you.
→ Model your HTB loan cost over time, with and without exit scenarios
For the full comparison of paying off vs keeping the loan — with the 10-year table — see should you pay off your Help to Buy loan or keep it? →
For the escalating rate picture over years 6–10 and beyond, see Help to Buy year 6, 7 and 8 interest explained →