Help to Buy Wales

Help to Buy Wales is an Equity Loan scheme designed to help people get on or move up the property ladder. It is available on new-build homes in Wales to a maximum value of £300,000.

The current Help to Buy is Wales' second incarnation of the scheme. It will run from 2016 until 2021. The new tranche of funding aims to support the building of more than 6,000 additional new Welsh homes during this time.

Under the scheme, qualifying applicants will get an Equity Loan from the Welsh Government of up to 20% of the full purchase price of a new-build home. A minimum deposit of 5% is required, so you'll only need to secure a mortgage for the remaining 75%.

What properties are included?

Can I take part in the scheme?

  • Help to Buy Wales is open to first-time buyers as well as home movers
  • You'll need a minimum 5% deposit
  • You must be eligible for a repayment mortgage on the part of the property that is not funded by the deposit or equity stake. This will be from a participating Help to Buy lender.
  • The home must be your only residence – you cannot own or part-own any other residential property

How much deposit do I need?

You must contribute a minimum cash deposit of 5% of the full purchase price. But what this translates into in pounds and pence depends on the total value of the property you want to buy.

This is an example of how Help to Buy Equity Loan will work on a property of £200,000.

Deposit 5% £10,000
Equity Loan (provided by the government) 20% £40,000
Mortgage (secured from a commercial lender) 75% £150,000
Property purchase price   £200,000

How do loan repayments work?

You will need to pay an initial £1 monthly management fee from the start of the loan until it is fully repaid. Otherwise, it is interest-free for the first five years. But after that point, the Welsh Government will start charging.

In year six, you will start paying 1.75% of the original loan's value as interest. And this will climb every year in line with the Retail Price Index (a measure of inflation) plus 1%.

These interest fees and any management costs (listed below) are NOT counted towards capital repayments.

How much can I borrow from a mortgage lender?

The most you'll be able to borrow on the mortgage element is 4.5 times your household income. You'll also need to show the lender that your monthly costs, such as mortgage repayment, service charges and fees, don't account for more than 45% of your net disposable income.

Finally, your loan must be a repayment mortgage of at least 25% of the purchase price. Interest-only first mortgages are not allowed under Help to Buy Wales.

Will I own 100% of the property?

The Welsh Government will own its percentage stake in your home until you have paid back the Equity Loan back in full or sold your home.

What are the total fees and costs involved?

In addition to the monthly management fees for the Equity Loan of £1 (paid by direct debit) and interest fees on the loan after five years, budget for the following:

  • Monthly mortgage repayments
  • Service charges if you buy a house or flat in a development with shared areas that require maintenance
  • Council tax
  • Life insurance
  • Building insurance
  • Utility bills

When do I pay the loan back?

You must pay the Equity Loan back either when you sell your home – or after 25 years. The total amount you repay will be the loan plus as any interest and charges.

You can opt to repay chunks of your loan – known as staircasing – at any point. However, each repayment must amount to a minimum 10% of the prevailing market value. For example, if your £200,000 home had increased in value to £220,000, you would have to repay at least £22,000.

Are there any restrictions?

Help to Buy Wales is not aimed at helping aspiring buy-to-let landlords. So the home you buy with your loan must be the only one you own. And you won't be able to sub-let the property until you've repaid your loan in full.

Where can I sign up for Help to Buy Wales?

The first port of call is to search for a new-build home through a participating builder in the scheme. You will then need to submit your application to Help to Buy Wales. You'll find everything you need at the Help to Buy Wales website.