The Help to Buy - Wales scheme supports buyers of new build homes in Wales.
Home buyers can participate in the scheme if they are buying a home worth up to £300,000 from a Help to Buy - Wales registered builder.
Participants in the scheme receive a shared equity loan from the Welsh Government of up to 20% of the purchase price.
The buyer must provide a minimum of 5% deposit, and the remaining amount is covered by a repayment mortgage from a participating lender.
A common misunderstanding is that Help to Buy - Wales is only for first-time buyers.
This confusion may come from the similarly named Help to Buy ISA, which is only available to those buying their first home.
With Help to Buy - Wales, you need a deposit of just 5%.
What’s more, you don’t pay any interest on the Welsh Government loan for the first 5 years.
This means costs will be kept down while you’re starting out in your new home.
Thanks to the 20% shared equity loan from the Welsh Government, your mortgage lender will only have to provide a maximum of 75% loan-to-value.
As a result your rate may be more competitive than the 95% loan-to-value mortgage products that would be available to you if you were to put a 5% deposit down without participating in the scheme.
One of the common myths about Help to Buy - Wales is that you have to pay the Welsh Government loan back after 5 years.
In fact, the 5-year anniversary is when you start paying interest on the loan.
You actually have 25 years to pay back the Welsh Government loan, although you can pay it back earlier if you prefer.
The only exception is if you decide to move, as you must pay the loan back when you sell the house.
If you want to buy with Help to Buy - Wales, you are limited to new build homes from registered builders.
You will also have to choose your conveyancer and mortgage lender from those who participate in the scheme.
The first 5 years are interest free, so you will only pay a £1 management fee each month.
After that you will also begin to pay interest, initially at a rate of 1.75%, but this will increase each year by the increase (if any) in the Retail Prices Index (RPI) plus 1%.
The Welsh Government shared equity loan may look more appealing than a mortgage, as the rates are generally lower.
However, unlike a mortgage, the loan is not for a fixed amount of money, but for a percentage value of your house – meaning that you might end up owing more than you expect.
For example, if your property were to double in value, you would still only have to pay your mortgage lender the original amount you borrowed plus interest.
But with your Help to Buy - Wales loan, you would owe double the amount you borrowed plus interest.
On the other hand, if your property were to decrease in price, your Welsh Government loan would also decrease.
The Help to Buy - Wales shared equity loan is based on the value of your property.
Home improvements, such as refitting kitchens or bathrooms, will affect the value of the property, and in turn affect the value of your loan. This means you can't make any significant changes to your home without the approval of the scheme.
Of course, this is only the case until you pay off the Welsh Government loan. After that you can alter the property however you wish, subject to the usual regulations.
Letting your property.
You cannot buy through the scheme if you intend to rent out all or part of the property, or if you plan to live in it while renting out another property you own.
If your circumstances change, you may be able to rent the property out further down the line if you meet certain criteria – but you will have to ask the scheme for permission, as well as asking your lender.
Again, this restriction will end once you have paid back your Welsh Government loan - although if you still have a mortgage you will have to notify your lender.
All our mortgages move onto our Standard Variable Rate after the initial rate period. Our Standard Variable Rate is currently 5.24%. If our Standard Variable Rate changes, your monthly repayments could go up or down.
Please note that the mortgage products and rates listed below are only available as part of the Help to Buy - Wales scheme.
|Initial interest rate %||Overall cost for comparison||Maximum loan to value||Product fee||Additional Features|
No early repayment charge
£500 cashback - provided to the Solicitor upon completion in the form of a BACS transfer.
More information about Help to Buy Wales, including details of how to apply for the scheme, can be found on the Welsh Government's Help to Buy page.
Your home may be repossessed if you do not keep up repayments on your mortgage.