Help to Buy: The Equity Loan That Grows With the House

Your Help to Buy equity loan is not a fixed sum of money you owe. It is a percentage of your home. That distinction is the whole point of this page, because it means the amount your estate repays when you die is almost never the amount you borrowed — it is that same percentage of whatever the property is worth on the day the loan is settled.

When you bought, the government lent you a share of the purchase price — commonly a fifth — through the Help to Buy equity loan scheme. You did not agree to repay those pounds. You agreed to repay that share. If the house has risen in value, the share has risen with it, and your estate owes more than you took out. If it has fallen, the share is worth less. The loan tracks the house, up and down, for as long as it runs.

So the question of what happens to your Help to Buy equity loan when you die has a clear answer: it becomes repayable, usually out of a sale, and the figure is set by valuing the property, not by looking up what you borrowed. This page shows how that figure is worked out, why the amount to insure is a moving target, and how a family keeps the house rather than being forced to sell it.

The short answer: you repay a share, not a sum

Under the Help to Buy equity loan scheme in England, the government lent buyers of new-build homes up to twenty per cent of the purchase price — up to forty per cent inside Greater London — to sit alongside a deposit and a main mortgage. The loan was interest-free for the first five years, and the term was set at twenty-five years.

Source: gov.uk, Help to Buy: equity loan scheme guidance, published under the Open Government Licence v3.0.

The critical term is that you repay a percentage, not a price. Borrow twenty per cent, and you always owe twenty per cent of the home's market value at the moment the loan is repaid — not the pounds that twenty per cent represented on the day you completed. When you die, that term does not soften. The loan becomes repayable, and the percentage is applied to a fresh valuation of the property as it stands then.

How the repayment figure is worked out

Because the debt is a share of value, settling it starts with valuing the property. The scheme requires a valuation by a surveyor who is a member of the Royal Institution of Chartered Surveyors — a RICS valuation — rather than an estate agent's estimate or an online figure. That valuation fixes the market value, the percentage is applied to it, and the result is what the estate repays.

A short, hypothetical example makes the mechanism clear. Suppose the purchase price was £250,000 and you took a twenty per cent equity loan, so the government advanced £50,000. If the property is valued at £300,000 when the loan is repaid, your estate owes twenty per cent of £300,000 — that is £60,000, not the £50,000 borrowed. Had the valuation instead come in at £225,000, the estate would owe twenty per cent of that, or £45,000. The pounds change; the twenty per cent does not. These figures are only an illustration of the arithmetic, not a forecast of any particular home's value.

Whether the share grows or shrinks over the years you hold the loan depends on the property market. The official record of how average prices have moved is the UK House Price Index; over most long periods since it began, average prices have risen rather than fallen, which is why more estates repay more than was borrowed than repay less.

Source: HM Land Registry and Office for National Statistics, UK House Price Index, published under the Open Government Licence v3.0.

Why a death usually triggers the repayment

The equity loan does not run forever, and it does not automatically pass to whoever inherits the house. It falls due at the earliest of three moments: when the property is sold, when you repay or reach the end of your main mortgage, or at the end of the equity loan's own term. A death frequently brings the first of those forward, because the property is often sold as part of administering the estate.

Your personal representatives — the executors under a will, or administrators if there is none — must settle the equity loan alongside the main mortgage and any other debts before the estate passes to your beneficiaries. In practice that means the loan is repaid from the sale proceeds, or refinanced by a family member who wants to keep the property, before anyone inherits. There is usually a defined period after a death in which the loan must be repaid or the property sold, rather than an immediate demand for the money, but the interest fee and management fee carry on running throughout it, so the clock still matters. The order matters too, and it starts earlier than most people realise: how the home was owned decides whether it even forms part of the estate to begin with, which is why it is worth knowing whether you hold it as joint tenants or tenants in common, a distinction we set out in joint tenants or tenants in common on completion day.

The interest and fees that keep running

For the first five years the equity loan carries no interest, which is part of what makes it affordable early on. After that, a monthly interest fee begins and increases over time, and a small monthly management fee applies for the whole life of the loan. These are charges for holding the loan; they do not reduce the percentage of the property you owe, and paying them is not the same as repaying the loan itself.

This is worth understanding at death for one reason: the fees keep running until the loan is actually cleared. If administering the estate takes many months, as it often does, the interest fee and the management fee continue to accrue in the meantime. It is another reason families are usually keen to settle or refinance the loan promptly rather than let it sit. And it is worth remembering that nobody was ever obliged to buy life cover to deal with any of this when the mortgage completed, whatever the sales conversation implied at the time — a point drawn out in nobody made you buy life cover with your mortgage.

What this means for the amount to insure

Put the pieces together and the insurance question answers itself. If you insure the amount you borrowed, you may under-insure the debt, because a percentage of a risen value is larger than the pounds advanced. The figure to think about is your percentage of a plausible future value of the home, not the historic loan amount.

One thing does shrink the debt during your lifetime: making a part repayment, sometimes called staircasing. You can pay off the equity loan in set portions, and each portion you clear permanently reduces the percentage of the property the government owns — and therefore the share your estate would ever have to repay. Each part repayment is valued the same way, by a RICS valuation at the time, so paying down when values are lower costs less than doing the same thing when they are high. If you have already staircased, insure the percentage that is left, not the one you started with.

Level term cover, where the sum assured stays flat for the whole term, suits this better than cover that decreases, because the equity loan does not amortise the way a repayment mortgage does. There is no schedule steadily reducing the balance, and the amount owed can climb with the market. Sizing the cover against a realistic future value, and reviewing it if you make a part repayment or if prices move sharply, keeps it pointed at the real liability. If you want that priced properly, you can get life insurance quotes and have an FCA-authorised broker work from your percentage and the property rather than the original advance. A debt secured on your home is not unique to Help to Buy, either; the same care applies to any charge over the property, as the business loan secured on the family home shows.

How the family keeps the house instead of selling

Selling is the default, but it is not the only outcome. The family can keep the home if the equity loan is repaid another way — from savings, from a remortgage in their own name once they qualify for it, or from the proceeds of a life policy that pays out quickly. What makes keeping it realistic is money that arrives fast and is large enough to cover the loan as valued, not as borrowed.

Where a partner survives and wants to stay, the mechanics and the emotional stakes are different from an estate being wound up for beneficiaries, and we deal with that specific situation in Help to Buy equity loan when my partner dies. And where a first home was the plan that a death has interrupted before it could happen, the savings side of it has its own rules, covered in a Help to Buy ISA and a first home that won't happen now. Whatever the route, a policy written in trust reaches the family without waiting for probate, which is exactly the window in which the loan and its fees are still ticking.

Scotland, Wales and Northern Ireland

Help to Buy equity loans were an England scheme, administered by Homes England. Wales ran its own Help to Buy – Wales equity loan through the Welsh Government, on broadly similar lines but with its own rules and price limits. Scotland operated different shared-equity schemes rather than the same equity loan, and Northern Ireland did not have a Help to Buy equity loan at all.

If your share of your home came through one of these, the principle to check is the same — do you repay a fixed sum, or a percentage of value? — but the scheme documents that govern your loan, and the body you repay, will differ. The succession rules that decide who inherits the property also differ in Scotland and Northern Ireland from those in England and Wales, which affects who deals with the loan and how quickly. You can find the wider set of these situations in our guide to life events that change who depends on you.

Frequently asked questions

Does the Help to Buy equity loan have to be repaid if I die?

Yes. The loan becomes repayable when the property is sold, when the mortgage is redeemed, or at the end of the loan term, and a death commonly triggers a sale. Your personal representatives settle it from the estate, alongside the main mortgage and other debts, before anything passes to your beneficiaries.

How is the repayment figure worked out?

By percentage, not by pounds. If you borrowed twenty per cent of the purchase price, you repay twenty per cent of the property's market value when the loan ends, so rising house prices increase the amount owed. A RICS valuation is required to fix the market value that the percentage is applied to.

Can my family keep the house instead of selling it?

They can, if the equity loan is repaid another way, such as from savings, a remortgage in their own name, or money from a life policy. The interest fee after the first five years and the monthly management fee keep running until it is repaid, so the timing of that repayment matters.