The debate that fills every Help to Buy forum
No question divides Help to Buy holders more sharply than this one. Every forum thread on the topic splits into two clear camps within the first few replies.
“Why would you even pay off HTB at 1.8% when mortgages are 4-5%? That's the cheapest money you'll ever have. Invest the difference.”
The argument sounds airtight: your Help to Buy interest rate starts at 1.75% in year 6. Why pay off cheap debt when your mortgage is costing you 4.5%? Put the cash into premium bonds or an index fund and come out ahead.
But the counter-argument is just as compelling: Help to Buy interest pays down nothing. You're not buying equity — you're renting the government's stake in your home, and that rent goes up every single year. The loan amount itself isn't fixed either; it grows with your property value.
Both sides are partially right. The answer depends on your timeline — and most people who say "keep it" haven't modelled what happens after year 10.
The case for keeping the Help to Buy loan
In year 6, the numbers genuinely do favour keeping the loan — at least on a month-by-month basis.
On a £60,000 equity loan, year 6 interest is £88/month (1.75% annually). If you instead took that £60,000 and added it to your mortgage at 4.5%, you'd be paying an additional ~£327/month on a 25-year repayment basis.
The difference — £239/month — could be invested. At a modest 4% return, that builds meaningful savings over time. The maths initially favour keeping the cheap debt.
There's also a property risk hedge: if your home drops in value, you repay less. The government shares your downside. For more on this angle, see our guide on keeping Help to Buy as cheap leverage →
Three reasons the "keep it" logic breaks down
The 1.75% vs 4.5% comparison looks compelling in year 6. By year 12, it looks very different. Here's why:
1. The rate escalates every year
From year 7 onwards, your Help to Buy rate increases annually using an inflation-linked formula (RPI+1% for pre-2021 completions, or CPI+2% for later ones). At assumed inflation of 3.5%, that's roughly a 4.5% increase in your HTB rate each year — compounding. By year 10, you're paying around 2.09%. By year 12, around 2.28%. By year 15, around 2.60%.
At some point — typically around year 10–12 — the HTB rate crosses the mortgage rate. At that point, the entire "cheap debt" argument evaporates.
2. Mortgage payments build equity. HTB interest payments don't.
This is the part the "keep it" camp consistently underweights. Every pound you pay on your mortgage reduces what you owe. Every pound of HTB interest vanishes completely — the balance stays the same, the government's stake stays the same, and next year costs slightly more.
Over a decade, a £60,000 equity loan at escalating HTB rates costs approximately £12,942 in interest, with zero reduction in balance. The mortgage equivalent would cost more per month — but every payment chips away at the debt.
3. The loan amount grows with your property value
Help to Buy isn't a fixed amount. You borrowed a percentage of your purchase price, and you repay that same percentage of the current value. If your £300,000 house is now worth £375,000, your "20% loan" has grown from £60,000 to £75,000 — without you borrowing an extra penny.
This means waiting isn't neutral. Every year your property appreciates, the hole gets bigger. For a full breakdown of this dynamic, see how property appreciation affects your Help to Buy repayment →
10-year comparison: HTB interest vs equivalent mortgage overpayment
Assumptions: £60,000 equity loan (pre-April 2021 formula, RPI ~3.5%). Mortgage comparison uses a £60,000 repayment mortgage at 4.5% over 25 years (£327/month). Equity built = cumulative capital repaid off that £60k mortgage.
| Year | HTB rate | HTB monthly | HTB cost (cumulative) | Mortgage monthly | Equity built |
|---|---|---|---|---|---|
| 6 | 1.75% | £88 | £1,050 | £327 | £1,680 |
| 7 | 1.83% | £92 | £2,154 | £327 | £3,396 |
| 8 | 1.91% | £97 | £3,318 | £327 | £5,148 |
| 9 | 2.00% | £100 | £4,518 | £327 | £6,936 |
| 10 | 2.09% | £105 | £5,778 | £327 | £8,760 |
| 11 | 2.18% | £109 | £7,086 | £327 | £10,620 |
| 12 | 2.28% | £114 | £8,454 | £327 | £12,516 |
| 13 | 2.38% | £119 | £9,882 | £327 | £14,448 |
| 14 | 2.49% | £125 | £11,382 | £327 | £16,416 |
| 15 | 2.60% | £130 | £12,942 | £327 | £18,420 |
Years 11+ highlighted — where HTB rate approaches typical fixed mortgage rates. Equity built figure is approximate; actual capital repayment varies by amortisation schedule.
The stark reality: by year 15, you've paid £12,942 in HTB interest with nothing to show for it. The mortgage equivalent route costs more per month — but you've built over £18,000 of equity in the same period.
When does the Help to Buy rate cross the mortgage rate?
With inflation at 3.5% and the RPI+1% formula, the Help to Buy rate increases by about 4.5% per year (i.e., the rate itself is multiplied by 1.045 each April). Starting at 1.75%:
- Year 6: 1.75%
- Year 10: ~2.09%
- Year 15: ~2.60%
- Year 20: ~3.24%
- Year 25: ~4.03%
At those projections, the HTB rate doesn't cross today's typical fixed mortgage rates (4–5%) within the 25-year term in this scenario. But that's an optimistic inflation assumption. If RPI averages 5%, the crossover happens around year 15–17. If mortgage rates fall to 3–3.5%, the HTB rate crosses sooner.
More importantly: the "crossover" argument misses the equity-building difference. Even at a lower absolute rate, HTB interest is always more expensive in real terms because it builds nothing.
The verdict: it depends on your timeline
Here's the honest answer, split by situation:
Planning to sell within 2–3 years?
The maths can favour keeping the loan short-term. You'll pay a relatively small amount in interest, and the transaction costs of remortgaging now may not be worth it. But get a RICS valuation before you list — you need to know exactly what you'll owe at completion.
Planning to stay 5+ years?
The escalation, equity stagnation, and growing loan balance make a very strong case for getting out sooner rather than later. The total cost of waiting compounds year on year. Model this in the calculator before you decide.
No immediate plans either way?
This is where most people go wrong. "We'll deal with it eventually" is the most expensive default. Consider at least staircasing — partially repaying to reduce the equity percentage — which cuts your ongoing interest without requiring a full remortgage. See the staircasing guide →
Model your specific situation
The numbers above use a £60,000 equity loan. Your situation is different — different loan size, property value, mortgage rate, and timeline all change the calculation. The calculator lets you input your exact figures and see a personalised year-by-year comparison.
→ Enter your details and see exactly what paying off vs keeping your HTB loan costs you over time
If you want a deeper look at the case for keeping the loan short-term, read our guide on using Help to Buy as cheap leverage → which makes the most honest version of that argument — and explains when it falls apart.
For the mechanics of how the interest escalates year by year, see Help to Buy year 6, 7, and 8 interest explained →