What Happens to Your Help to Buy Equity Loan if You Cannot Repay?

What Happens if You Cannot Repay Your Help to Buy Equity Loan?

Financial circumstances change. Job loss, relationship breakdown, illness, or a sustained fall in property values can all make it difficult or impossible to meet your Help to Buy obligations. If you are in this position, it is important to understand both the government's powers and the options available to you — and to act early rather than hoping the situation resolves itself.

Management Fee Arrears

The most immediate financial obligation for borrowers in years six and beyond is the monthly management fee. If you fall into arrears on management fees, Target HCA will contact you. Persistent non-payment is a breach of your equity loan agreement and can, in serious cases, lead to enforcement action.

However, Target HCA is not a commercial lender with an incentive to repossess. The government's goal is recovery of the equity loan, not ownership of your home. If you contact Target HCA proactively and explain your financial circumstances, there may be options for a payment arrangement on arrears, particularly if your difficulties are temporary.

**Do not ignore letters or portal notifications from Target HCA.** Ignoring correspondence will not make the debt go away and removes any goodwill that might otherwise support a managed solution.

What Powers Does the Government Have?

The Help to Buy equity loan is secured by a second charge on your property. In the most serious cases — where a borrower is in substantial breach of the equity loan agreement and has not engaged with Target HCA — the government could, in principle, seek to enforce the charge. This could ultimately result in legal proceedings, though this would be an extreme last resort after all other options had been exhausted.

In practice, enforcement action of this nature is rare. The government's preference is always recovery through a managed sale or voluntary repayment.

If You Cannot Afford to Repay on Sale

If you sell your home and the sale proceeds are insufficient to repay both your conventional mortgage and your equity loan in full — for example, because of negative equity — you will need to engage both your mortgage lender and Target HCA. In this scenario:

• Your mortgage lender may need to agree to a shortfall sale (accepting less than the outstanding mortgage balance)
• Target HCA may need to agree a reduced settlement if the proceeds are genuinely insufficient
• You may remain liable for any shortfall after the sale, depending on the terms agreed

This is a complex situation that requires specialist legal and financial advice. Seek help from a debt charity (such as StepChange or Citizens Advice) and a solicitor with experience in negative equity conveyancing.

If Your Property Has Fallen in Value

Because the equity loan repayment is calculated on current market value, a fall in property values automatically reduces the cash amount you owe. If your home falls below its original purchase price, you will repay less than you originally borrowed. This is the one scenario where the equity loan structure works directly in your favour. However, as described above, the conventional mortgage does not adjust with market value, and the total debt burden may still exceed the property's worth.

Seeking Debt Advice

If you are struggling to meet your Help to Buy obligations, the following services offer free, confidential advice:

• **StepChange Debt Charity** — comprehensive debt advice for homeowners
• **Citizens Advice** — general advice including housing and debt
• **National Debtline** — telephone and online advice
• **Money Helper** (formerly Money Advice Service) — government-backed guidance

These organisations can help you understand your options, liaise with creditors on your behalf, and explore formal debt solutions if necessary.

Using Our Calculator to Understand Your Position

Before contacting Target HCA or seeking advice, use our [Help to Buy calculator](/help-to-buy-calculator) to establish a clear picture of your current equity loan obligation. Understanding the numbers — your loan percentage, current estimated property value, projected management fees, and total repayment figure — puts you in a stronger position to have productive conversations with advisers and administrators.

Key Points

• Management fee arrears are a breach of your equity loan agreement — contact Target HCA proactively if you are struggling
• The government's preference is always a managed outcome, not enforcement
• Enforcement action (including potential charge enforcement) is a last resort after all other options have been exhausted
• Falling property values reduce the cash equity loan repayment, but the conventional mortgage does not adjust
• Free debt advice is available from StepChange, Citizens Advice, and National Debtline — seek it early