Selling a Property With a Help to Buy Equity Loan, How Repayment Works

What Is the Help to Buy Equity Loan?

The Help to Buy: Equity Loan scheme (England) allowed first-time buyers of new-build properties to borrow up to 20% of the purchase price from the government (40% in London), interest-free for the first five years. The scheme closed to new applications in October 2022, but hundreds of thousands of borrowers are still repaying equity loans on properties they own.

If you are one of those borrowers and you are selling, the repayment rules are significantly different from a standard mortgage redemption, and the amount you owe is not what you originally borrowed.

The Critical Point: You Repay a Percentage, Not a Fixed Amount

This is the most important thing to understand about Help to Buy equity loan repayment on sale:

**You do not repay the original loan amount. You repay the same percentage of the property's current market value.**

If you borrowed 20% of a £250,000 purchase price (£50,000), and your property is now worth £300,000 when you sell, you repay 20% of £300,000, that is, **£60,000**, not £50,000.

Conversely, if your property has fallen in value to £220,000, you repay 20% of £220,000, **£44,000**, which is less than you originally borrowed.

The equity loan behaves like a **shared equity stake**, not a fixed debt. Homes England has shared in any upward or downward movement in your property's value.

The Target HCA Process

The redemption of a Help to Buy equity loan is managed through **Target HCA** (formerly Target Group), the servicing agent appointed by Homes England. You cannot simply pay off the equity loan like a mortgage, there is a formal process.

Step 1: Instruct Your Solicitor Early

Your solicitor must contact Target HCA as soon as the property is marketed or an offer is accepted. The process can take several weeks, and delays in initiating contact with Target HCA are one of the most common causes of delays in Help to Buy property sales.

Step 2: Obtain a RICS Valuation

Target HCA requires a **RICS valuation** of the property by a Royal Institution of Chartered Surveyors qualified surveyor to establish the current market value for redemption purposes. This valuation must be no more than three months old.

Note: this is not the same as the buyer's survey or the buyer's lender's valuation. It is a standalone RICS valuation obtained by you (the seller) specifically for Target HCA.

The cost is typically £300–£500.

Step 3: Request a Redemption Statement

Your solicitor submits the RICS valuation to Target HCA and requests a **redemption statement**. This is the formal document setting out the precise amount required to repay the equity loan, calculated on the basis of the RICS valuation.

Step 4: Repayment at Completion

The equity loan is repaid at completion from the sale proceeds, alongside your mortgage. Your solicitor will co-ordinate the payments from the buyer's funds to your mortgage lender and to Target HCA simultaneously.

What If the Buyer's Agreed Price Differs From the RICS Valuation?

If your agreed sale price is higher than the RICS valuation, Target HCA will use the **higher of the two figures** to calculate repayment. This prevents sellers from agreeing a below-market price to reduce their equity loan repayment.

If the agreed sale price is lower than the RICS valuation (for example, because a survey revealed significant defects and the buyer renegotiated), Target HCA will typically accept the lower figure, subject to supporting evidence.

What Happens if the Property Has Fallen in Value?

If your property is worth less than you paid for it (negative equity), the equity loan amount due will also be lower than the original sum borrowed. You will not be penalised for a fall in value, you simply repay the current percentage of the current value.

However, if your mortgage is also in negative equity (the outstanding mortgage balance exceeds the property value), selling may not be straightforward. See our separate guide on selling in negative equity for detail on the options available.

Interest Charges From Year Six Onwards

If you are still holding the equity loan beyond the initial five-year interest-free period, you will be paying a management fee to Target HCA (starting at 1.75% of the loan value per year, increasing annually by RPI plus 1%). These charges do not reduce the capital owed, they are purely a fee for holding the loan. Selling the property clears the equity loan and stops these charges.

Staircasing: Repaying Before You Sell

You can repay part or all of the equity loan before selling, through a process called **staircasing**. Minimum partial repayments are 10% of the property's current market value. Staircasing also requires a RICS valuation and goes through Target HCA.

If you expect the property to increase in value, repaying the equity loan early through staircasing locks in a lower repayment figure. If you expect the market to fall, it may be advantageous to hold the loan.

Key Timelines for Sellers

Allow at least **six to eight weeks** from instruction for the Target HCA process to complete. Starting late is the single most common cause of Help to Buy sale delays.

Property Passport UK

You can search your property on Property Passport UK to review its EPC rating and sold price history, useful context when instructing a RICS surveyor for the Target HCA valuation and setting your asking price.