Help to Buy closed to new applicants in 2023, but hundreds of thousands of existing equity loans are now moving through their interest-charging years, and many owners are actively deciding whether to staircase, redeem, or wait. This guide covers exactly how the interest compounds from year 6, why the amount you repay is based on your property's current value rather than the original loan, and the practical staircasing and redemption process.
Figures below reflect GOV.UK Help to Buy guidance and Homes England's loan administrator terms, current to mid-2026, with CPI around 3.0% in April 2026. This is general information, not financial advice; get a formal redemption or staircasing quote from your loan administrator before making a decision.
1. The interest timeline, in full
| Period | What you pay |
|---|---|
| Years 1 to 5 | Interest-free; £1 a month management fee only |
| Year 6 | Interest begins at 1.75% of the outstanding loan (as a percentage of current property value) |
| Year 7 onwards | Rate increases annually, compounding based on inflation (see below) |
2. How the interest actually compounds
From year 7, the new rate is calculated as: previous year's rate + (previous year's rate × that year's inflation-linked increase). The inflation link is RPI plus 1% for loans taken out between 2013 and 2021, or CPI plus 2% for loans taken out between 2021 and 2023. With CPI running around 3.0% in April 2026, that's an increase factor of roughly 5% being applied to the existing rate each year for newer loans, not a flat 5 percentage points added on. GOV.UK's own worked example, using a 10% RPI+1% figure for illustration, shows the rate climbing from 1.75% in year 6 to 1.9425% in year 7, then 2.1561% in year 8, each step compounding on the last rather than simply stacking evenly.
3. The percentage trap: what you actually repay
Whatever percentage your equity loan represented at purchase, commonly 20%, or up to 40% in London, stays fixed, but the pound amount you owe is recalculated against your property's current market value at the point you staircase or redeem, established through a RICS valuation. Consider a £250,000 new-build bought in 2019 with a 20% (£50,000) Help to Buy loan: if a RICS valuation in 2026 comes back at £310,000, the amount required to redeem is 20% of £310,000, which is £62,000, twelve thousand pounds more than the original loan, purely because the property's value has risen. If prices had fallen instead, the amount owed would have fallen too, the mechanism cuts both ways, but in a rising market this is the single most misunderstood part of the scheme.
4. Staircasing versus full redemption
5. The valuation and redemption process
- Instruct a RICS Red Book valuation from a surveyor on your loan administrator's approved panel. If the building has certain types of external cladding, a specialist valuation may be required instead, see our Cladding, EWS1 and Mortgageability guide for what that involves.
- Submit your application form to the loan administrator along with the valuation report and the admin fee, typically around £200.
- Clear any arrears on interest or management fees; these must be resolved before a staircasing or redemption transaction can proceed.
- Receive a redemption or staircasing statement, usually within 10 to 15 working days, confirming the exact sum owed.
- Transfer the funds, from savings, a remortgage drawdown, or sale proceeds, and the administrator removes or updates the second charge on your title.
The valuation is typically only valid for around three months; if the transaction doesn't complete within that window, a fresh valuation is usually required. The overall process, from instructing the valuation to the charge being lifted at the Land Registry, commonly takes 6 to 8 weeks.
6. Frequently asked questions
When do I start paying interest on my Help to Buy equity loan?
The first five years are interest-free, with only a £1 a month management fee payable. From year 6, interest begins at 1.75%, and from year 7 onwards it increases annually based on inflation, RPI plus 1% for loans taken out between 2013 and 2021, or CPI plus 2% for loans taken out between 2021 and 2023.
Do I repay the original Help to Buy loan amount or something else?
You repay the same percentage of your property's current market value that the loan represented at the outset, not the original loan amount in pounds. If house prices have risen since you bought, the amount you owe rises correspondingly, even though the percentage itself never changes.
What's the difference between staircasing and redeeming a Help to Buy loan?
Staircasing is a partial repayment, in minimum tranches of 10% of your property's current market value, which reduces your outstanding equity loan percentage and interest charges going forward. Redemption is repaying the entire outstanding loan in one transaction, fully clearing the equity loan and removing the second charge from your title.
Does Help to Buy interest actually compound each year?
Yes. From year 7 onwards, the new interest rate is calculated by adding the previous year's rate to itself multiplied by that year's inflation-linked increase, meaning the rate compounds on itself rather than simply adding a fixed percentage point each year, which accelerates the cost more than many borrowers expect.
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