Help to Buy – Wales is an initiative that provides shared equity loan assistance to home buyers from Help to Buy (Wales) Limited (HtBW) with funding provided by the Welsh Government.
The Help to Buy – Wales scheme makes new‑build homes available to all home buyers (not just first time buyers) who wish to buy a new home, but may be constrained in doing so – for example as a result of deposit requirements – but who could otherwise be expected to repay a mortgage. Support of up to a maximum of 20% of the purchase price is available to buyers through a shared equity loan funded by HtBW, while buyers are required to provide a deposit of a minimum of 5%* of the purchase price.
How does Help to Buy – Wales work?
With Help to Buy – Wales, the buyer (‘you’) buys a new home on a new-build development with assistance from HtBW in the form of a shared equity loan.
You must take out a first mortgage (with a qualifying lending institution e.g. a bank or building society) and this mortgage must be on a repayment basis.
John Kelly Construction will provide a reservation agreement, which confirms that the house you have viewed will be reserved whilst arrangements are confirmed.
The mortgage, together with your cash contribution of at least 5%* of the purchase price, must make up a minimum of 80% of the full purchase price. The maximum full purchase price of an eligible property is £300,000.
HtBW will provide a shared equity loan to fund the balance needed to make up the full purchase price of your home, up to a maximum of 20% of the full purchase price. The shared equity loan must be repaid after 25 years or earlier if you sell your home, or in certain other circumstances.
You must repay the same percentage of the proceeds of the sale to HtBW as the initial shared equity loan (i.e. if you received a shared equity loan for 20% of the purchase price of your home, you must repay 20% of the proceeds of the sale).
No interest is payable on the shared equity loan for the first five years. After that, you will pay interest of 1.75%, rising annually by the increase (if any) in the Retail Prices Index (RPI) plus 1%. In addition, you will pay a small monthly management fee, by direct debit, of £1 per month from the commencement of the shared equity loan until it is repaid.
HtBW will assess and approve your purchase of a Help to Buy – Wales property, and you will need their approval before you proceed with the buying process.
Further details on all these points and the buying process are set out within the attached guide.