Your Guide to the Help To Buy Scheme in Wales
Help to Buy Wales, launched by the Welsh government in 2014, aims to allow first-time buyers or home movers to get on the property ladder more accessible by offering assistance with down payments and mortgage costs.
However, with so much information available it can be difficult to know where to start. To help with that, we have put together a comprehensive guide that covers everything about the Help to Buy Scheme in Wales – what it is, the eligibility criteria, and the application process.
What Is the Help To Buy Wales Scheme?
The Help to Buy Scheme Wales is an equity loan scheme provided by the Welsh Government, which has been created to assist first-time buyers and existing homeowners in Wales in purchasing a new-build home with a purchase price of up to £300,000. Through financial assistance, this scheme makes homeownership much simpler for eligible individuals across Wales.
How does Help to Buy Wales work?
The Help to Buy Wales scheme supports eligible buyers by offering an equity loan of up to 20% of a property’s purchase price with no need to pay interest for the first five years. This means only 5% must be put down by the buyer as a deposit. With up to 20% provided via a shared equity loan, the remaining 75% may be covered through a repayment mortgage from qualified lenders.
For example: if a property has a market value of £200,000, its buyer would need to put down a minimum deposit of £10,000 (5%) and secure a mortgage loan for £150,000 (75%). The remaining £40,000 (20%) would come from the government as an equity loan.
Is the loan interest-free?
The shared equity loan is interest-free for the first five years after which you will pay interest but at a low-interest rate. The equity loan amount is repayable in full when the property is sold, or over a 25-year period, whichever comes first.
If the value of the property increases, the equity loan payments will also increase. Similarly, if the value of the property decreases, the amount owed will also decrease.
It’s also important to note that Help to Buy Wales only covers new build properties purchased from registered Help to Buy Wales homebuilders and individuals must also meet eligibility criteria.
Who Is Eligible To Apply for Help To Buy Wales?
To be eligible for the scheme you must meet certain criteria.
- Be looking to buy a newly built home that meets a minimum EPC rating of B
- Be buying a home worth up to £300,000 (from 1 April 2023) from a registered builder
- Be able to cover 80% of the property price through a minimum 5% deposit of the purchase price and a repayment mortgage
- Take out a first-charge repayment mortgage with a qualified lender
You will NOT be eligible if:
- You are renting an existing home and are looking to buy another
- You are looking to sublet the new build property
Help to Buy Wales: Application Process
- Contact a Help-to-Buy Mortgage Advisor
If you meet the eligibility criteria for the Help to Buy Wales equity loan and are interested in applying, the first step is to contact a Help to Buy agent. These financial advisers can provide guidance on the application process and help you determine how much you can afford to borrow.
- Find and Reserve a New Build Property
Once you’ve found a new build property that you’re interested in, you’ll need to reserve it with the homebuilder and complete a Help to Buy application form. This form will ask for details about your income, employment, and savings, as well as information about the property you’re purchasing to ensure you meet the affordability criteria.
- Obtain a Decision in Principle (DIP)
Your Help to Buy agent will review your application and provide you with a Decision in Principle (DIP) if you meet the eligibility requirements. This DIP will show how much you can afford to borrow and will be valid for 90 days.
- Apply for a Mortgage
Next, you’ll need to apply for a mortgage from a qualified lender. Your Help to Buy agent can provide you with a list of approved lenders.
- Complete Your Help to Buy Application
Once you’ve received a mortgage offer, you can complete your Help to Buy application and submit it for approval.
- Receive the Government Equity Loan
If your application is approved, the government will provide you with an equity loan to cover up to 20% of the purchase price of the property.
- Arrange Legal Representation and Insurance
You’ll need to ensure that you have a solicitor to handle the legal aspects of the purchase and that you have arranged for appropriate insurance for the property.
Why Choose Us as Your Mortgage Brokers?
The application process for the Help to Buy Wales scheme can be complex, so it’s important to work with a Help to Buy mortgage advisor to ensure a smooth and successful application.
Our expert team will guide you through the application process, liaise with mortgage lenders on your behalf, and help you secure the best possible mortgage deal to suit your unique needs.
If you are looking to buy a new build home and are interested in the Help To Buy Wales scheme, don’t hesitate to contact us today.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE.