Repaying Your First Home equity loan: 20% of the value

How does repaying Your First Home equity loan work?

Repaying Your First Home equity loan is expected to work the way Help to Buy did: you pay back 20% of what your home is worth on the day you repay, not the sum you borrowed. On the £230,000 example used in reports of the announcement, the loan starts at £46,000. If the home is worth £253,000 when you repay, you owe £50,600. If it is worth £207,000, you owe £41,400.

That is the whole scheme in two sentences, and it is why an equity loan feels cheap in the early years and can feel expensive later. The government has not yet published the repayment rules for Your First Home. It has said only that the full detail comes at the Budget on 28 October 2026 (GOV.UK). Everything below about how, when and at what cost you repay is an assumption based on Help to Buy, the scheme that ran from 2013 to 2023.

Why do you repay a share of the value, not a fixed sum?

Because an equity loan is a share of your home, not a debt of a fixed size. The government puts up 20% of the price, and in return it owns 20% of the home’s value until you buy it back. The government’s Help to Buy buyers’ guide spelled out the consequence: “When you repay some or all of your equity loan, the amount you pay is worked out as a percentage of the market value at that time. If the market value of your home increases, so does the amount you have to repay” (GOV.UK).

The interest you pay after the free period does not change this. Under Help to Buy, “interest payments do not go towards repaying your equity loan” (GOV.UK). The interest page covers that separate bill.

Worked examples on a £230,000 home

All four examples assume a 20% loan of £46,000 on a £230,000 new build, and the Help to Buy rule that you repay the same percentage of the market value at the time.

Two details from the Help to Buy rules sharpen the picture. If you repaid when selling, the 20% was taken from “either the market value of your property, or the sale price, whichever is higher” (GOV.UK). And the market value was not your guess or an estate agent’s: it was set by a surveyor who is a member of the Royal Institution of Chartered Surveyors (RICS), the professional body for surveyors, and whose report was valid for only three months (GOV.UK).

Try your own price and growth rate in the equity loan repayment calculator.

When did Help to Buy loans have to be repaid?

Help to Buy loans had to be repaid in full when one of three things happened: “reach the end of the equity loan term (normally 25 years), pay off your repayment mortgage, sell your home” (GOV.UK). You could also repay early, in full or in part, at any time.

Your First Home has not announced a loan term. We assume 25 years, and the calculator does the same, until the Budget says otherwise.

What were the three ways to repay?

GOV.UK publishes a separate guide for each route Help to Buy owners could take. We assume Your First Home will offer the same three, run by whichever body administers the new scheme.

1. Repaying with your own money

You could “repay all or some of your equity loan at any time” (GOV.UK). A part payment had to be worth at least 10% of the home’s market value, and “you cannot leave less than 5% of the market value amount to repay” (GOV.UK). In practice, a 20% loan could be cleared in two halves. On a home worth £253,000, each half would be £25,300.

The process had four fixed costs and steps:

1. A valuation by a surveyor who is a member of the Royal Institution of Chartered Surveyors (the letters MRICS or FRICS after their name), who had to inspect the home inside and quote at least three comparable sales from the past 12 months. You paid the surveyor.
2. The report was “valid for 3 months from the date it was produced” and had to reach the administrator within five working days. If it expired before you completed, a desktop update bought another three months (GOV.UK).
3. An “administration fee of £200 when you apply to repay your equity loan” (GOV.UK).
4. A conveyancer (a property solicitor) to handle the legal side. Once the conveyancer gave a formal written promise to pay (a “legal undertaking”), the scheme issued its permission to complete (the “Authority to Complete”) within five days.

The repayment figure also included “any outstanding interest, fees and arrears” (GOV.UK).

2. Repaying when you sell

Selling ended the loan. The 20% came out of the sale money at completion, worked out on the sale price or the market value, whichever was higher. “If the funds from the sale of your home do not cover the total amount due, you’ll need to make an additional payment” (GOV.UK). The same £200 fee and three-month RICS valuation applied.

3. Repaying when you remortgage

Remortgaging means replacing your mortgage with a new one, often to get a better rate or to borrow more. Under Help to Buy you did not have to repay the loan to remortgage, but you needed the administrator’s permission to change lender or borrow more unless you were repaying in full: “If you’re repaying your equity loan in full you do not need our permission” (GOV.UK).

Many owners used this route to clear the loan: borrow more on the new mortgage, hand the extra to the government, own 100% of the home. The government’s own evaluation of Help to Buy, published in September 2026, found “some dissatisfaction with the redemption process and confusion surrounding the equity loan repayment”, with owners citing “short valuation periods and poor communication from the loan administrator” (GOV.UK). Expect the paperwork to take weeks, not days.

Why does a rising market make the loan dearer?

Because the government’s 20% share rises with the price. In the table above, a 25% rise in value adds £11,500 to the repayment. You keep 80% of the gain, £46,000 of the £57,500 rise, and the government takes the other 20%. That is a fair swap for the money it put in, but it is real money you would have kept with a 95% mortgage.

A falling market works the other way. If the £230,000 home is worth £207,000, the government takes a £4,600 loss on its share and you repay £41,400. That protects you on the loan, but not on the mortgage: with a 2.5% deposit, a fall of just over 3% in value leaves your own share worth less than your mortgage, which is negative equity. The pros and cons page works through that risk.

There is one more effect that catches people out. Interest under Help to Buy was charged on the original sum, so it did not rise with the value, but the repayment did. Owners in fast-rising areas found the repayment growing by thousands of pounds a year while the interest crept up from about £67 a month in year six to about £78 by year ten. Cheap to hold, expensive to leave.

What strategies did Help to Buy owners use?

None of these is advice. Which one made sense depended on mortgage rates, house prices and how long the owner planned to stay. But five patterns were common, and each can be tested in the calculator.

• Repaying before the interest starts. Owners who could save the 20% within five years repaid at a point when the loan had cost them only the £1 monthly fee. On a flat £230,000 home that meant finding £46,000, plus the £200 fee and valuation.
• Overpaying the mortgage. Paying an extra £150 a month on a 5% mortgage for five years cuts the balance by about £10,200 (our arithmetic). A smaller mortgage meant a lender was more willing to advance the extra sum needed to clear the loan later.
• Remortgaging to clear the loan. Borrowing an extra £50,600 at 5% over 20 years costs about £334 a month (our arithmetic), far more than the £67 a month of equity loan interest in year six. Owners did it not to save on interest but to stop the loan growing with the home’s value.
• Repaying in halves. Paying off 10% of the value first, then the rest later, spread the cost, but meant paying for two valuations and two £200 fees.
• Sitting tight. In a flat or falling market the loan got cheaper on its own, and the interest stayed modest. Owners who planned to stay put for many years sometimes kept the loan into its second decade.

What to do next

• Put your own numbers into the equity loan repayment calculator and look at the 10% and 25% growth rows before you decide anything.
• Read the interest page so you understand the two separate bills.
• Read the pros and cons before you fall for a show home.
• Come back after the Budget on 28 October 2026. If the repayment rules differ from Help to Buy, this page will change the same day.