Help to Buy Wales

Posted 10 September 2015 by Keith Osborne

What is the Help to Buy Wales scheme and how does it work?

As with other regional variations, Help to Buy Wales (Cymorth iBrynu-Cymru) works along the same principles of the main Help to Buy scheme. With Help to Buy Wales the buyer puts down an initial deposit, the government (subject to the buyer meeting qualifying criteria) then gives the buyer an equity loan with a commercial lender supplying the rest of the mortgage as follows:

  • The buyer puts down an initial 5% of the property purchase price.
  • The Welsh government then gives an equity loan of 20% of the property purchase price
  • The buyers obtains a mortgage from a lender for the remaining 75%

Working example

Property price £150,000 (100%)
Initial deposit £7,500    (5%)
Equity loan     £30,000    (20%)
Remaining mortgage  £112,500    (75%)

Qualifying criteria

Anyone who is resident in Wales can apply for Help to Buy Wales. Homebuyers must purchase a new build property that is worth £300,000 or less. You will be means-tested to ensure that you're in a financial position to repay the mortgage. You don't need to be a first-time buyer, you can also be someone moving home. However, the property must be intended as your main residence and you cannot own more than one property. You cannot use this scheme for buy-to-let.

Repaying the loan

The loan needs to be repaid within 25 years and can be repaid at any time during that period. There is an initial administration fee for the equity loan of £1 per month. For five years however, the loan is completely interest-free. After that time, the loan is paid back at 1.75% (of the property price at that time) then increasing in line with the Retail Prices Index plus 1%. Any fees you pay, such as the administration fee, do not count towards the repayment of the loan.

Participating housebuilders and lenders

There are a large number of participating housebuilders taking part in the scheme.  Similarly, there are a numerous approved lenders for Help to Buy Wales. Some of these lenders involved are:

  • Barclays Bank Plc
  • Lloyds Banking Group
  • Monmouthshire Building Society
  • Nationwide Building Society
  • Principality Building Society
  • TSB
  • Virgin Money

A full list of participating housebuilders and lenders can be found on the Welsh Government's Help to Buy website.

Other information

There are no restrictions on the number of bedrooms a property has as long as it costs £300,000 or less. Up to the time the shared equity loan is paid off, Help to Buy Wales will own whatever percentage of the property your equity loan covers. In the event you wanted to sell the property, you would receive 80% of the property price with Help to Buy Wales receiving 20% of the price.

The process of buying through Help to Buy Wales:

  1. Find a Help to Buy Wales property through a participating builder
  2. Submit application to Help to Buy Wales
  3. Help to Buy Wales will check your application and eligibility
  4. if approved, confirmation sent to buyer, buyer's solicitor and builder
  5. Buyers applies for full mortgage from lender and receives offer
  6. Contracts are then exchanged, funds are transferred and the sale is complete.

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