Help to Buy – Wales

Help to Buy – Wales. How does it work?

Help To Buy Wales

Help to Buy – Wales allows eligible purchasers to buy new-build homes with assistance from the Welsh Government in the form of a shared equity loan.

What does this mean in practice?

Help to Buy – Wales shared equity loans are available to both first-time buyers and home movers wishing to purchase new-build homes worth up to £300,000.

With Help to Buy – Wales, buyers won’t be able to sub-let their home.

With Help to Buy – Wales:

  • Buyers need to contribute a deposit equal to 5% of the property price.
  • The Welsh Government (through Help to Buy (Wales) Ltd) will fund a shared equity loan for up to 20% of the purchase price.
  • Buyers will then need to secure a mortgage to cover the remaining balance.

Example undertaking

For a property worth £200,000 Amount Percentage
Cash Deposit £10,000 5%
Shared Equity Loan £40,000 20%
Your Mortgage £150,000 75%

If in the future the home in the table above sold for £210,000 the buyer would get £168,000 (80%, based on their mortgage and the cash deposit) and pay back £42,000 on the shared equity loan (20%).

The buyer will pay off their mortgage using the proceeds of the sale and will then repay the Help to Buy -Wales shared equity loan.

Are there any fees attached to the shared equity loan?

From the time a buyer receives the shared equity loan they will be charged a small administration fee of £1 per month.

Then, in the 6th year, they’ll be charged interest of 1.75% per annum of the original shared equity loan amount. After this, the interest will increase every year. This increase is worked out by using the Retail Prices Index plus 1%.

All buyers will be contacted before the shared equity loan interest starts and they’ll also be sent a statement about their shared equity loan each year.

The fees do not count towards paying back the shared equity loan

If you live in Wales and want to know whether you would qualify for a Help to Buy loan contact Mortgage ID’s experts on 02920 394400