The Help to Buy – Wales Scheme is a shared equity loan given to eligible buyers of new build homes.
The current scheme was due to end at the same time as the English version at the end of March 2023, however Finance Minister, Rebecca Evans, confirmed that the Welsh government will spend £63m to keep the shared equity scheme going in Wales. Good news for local people who are looking for assistance getting onto the property ladder! In this article we take a look at the what the Help to Buy – Wales scheme is, who can apply, how it works and how long the scheme will run for…
What is the Help to Buy – Wales Scheme?
Help to Buy – Wales is an equity loan from the Welsh Government to help home buyers to purchase a new build home. If eligible, you can borrow up 20% of the market value of a new home. Then after 5 years, you pay monthly interest charges against the loan. It is important to understand that these payments do not repay the loan, they are interest payments.
You can repay the loan in full or make part payments at any time (your first part payment must be a minimum of 10% of the property’s value at the time of the repayment).
Help to Buy – Wales is not a discount scheme, the price of the property you purchased isn’t reduced. It is a loan that is tied to the value of your property. The loan can be for a minimum of 10% and a maximum of 20% of the purchase price. The loan is then secured against your property just like a mortgage. For the first 5 years you pay a monthly management fee of £1 per month by direct debit. On year 6 you will pay the £1 monthly management fee plus a monthly interest fee of 1.75% of the loan value.
The loan must be repaid when you either:
- Reach the end of the loan term (usually 25 years),
- Sell the property,
- Or pay off your mortgage.
How long has the scheme been extended for?
The Help to Buy – Wales scheme has been extended until 31st March 2025.
Who is eligible to apply for the Help to Buy Scheme in Wales?
The Help to Buy – Wales scheme was created to help people who want to be a homeowner but without help would not be able to access an affordable mortgage. If your financial position is such that you would be able to secure a 90% first charge mortgage without the support of Help to Buy – Wales, you will not be eligible. You must however, be able to fund up to 80% of the purchase price of your new home with a combination of a minimum 5% deposit from you and a repayment mortgage. An independent financial or mortgage advisor can help you to work out the figures if you are unsure.
To qualify you will need to buy your new home through a Help to Buy – Wales registered homebuilder, a list of whom can be found on the Welsh Government website, click here.
In addition, to qualify for a Help to Buy – Wales equity loan:
- The property must be your only home.
- You must take out a first charge repayment mortgage with a qualifying lender.
- You must be able to afford the monthly fee and interest payments.
New Criteria for 2023!
From 1st April 2023, the property you purchase must have an EPC B rating as a minimum.
From 1st of April 2023 the price cap on the property purchased rises from £250k to £300k.
Before making a decision whether Help to Buy – Wales is right for you, it is worth while reviewing all the information contained in the Governments buyers guide which can be viewed here. It might also be a good idea to check out the other schemes available aimed at helping homebuyers, view all the Government home buying schemes here.
