What is Help to Buy Wales?
Help to Buy Wales is a scheme available for buyers of new build homes by providing a shared equity loan. The scheme supports the purchase of homes up to £250,000 (from April 2021) bought through a registered Help to Buy Wales builder.
How does it work?
You will have to provide 5% deposit of the purchase price and the scheme will provide a shared equity loan of up to 20% of the purchase price, meaning you could put forward a 25% deposit toward your purchase. You must also take out a repayment mortgage to cover the remaining amount, i.e. you cannot be a cash purchaser.
|For a property worth £200,000||Amount||Percentage|
|Shared equity loan||£40,000||20%|
Am I Eligible?
There are certain criteria you must satisfy to be eligible for the Help to Buy Wales scheme. Firstly you must be buying an eligible home for a maximum price of £300,000 from a builder who is registered with the scheme. This can be checked on the Help to Buy Wales website. You must then be able to fund at least 80% of the purchase price through a combination of a repayment mortgage and a minimum deposit of 5% of the purchase price. You must obtain your mortgage from a qualifying lender/bank. Again this can be checked on the Help to Buy Wales website or with your mortgage broker. You cannot sublet any part of the house you are buying, be renting your existing home or buying a second home through the scheme.
In order to apply through the scheme you must first read the Help to Buy Wales Buyers Guide, which provides full details about the scheme. You should also read the information leaflet which give information about buying a home using the Help to Buy Wales scheme. If you wish to proceed with your application, you will then need to find an approved Help to Buy Wales independent financial advisor and again, this information can be found on their website. You will then need to find an eligible property being offered by a registered Help to Buy Wales builder, and instruct a Help to Buy Wales accredited conveyancer to handle the purchase of the property. You are now ready to submit your completed Help to Buy Wales Application Form!
How do I repay my Help to Buy Shared Equity Loan?
Once you have bought your property through the Help to Buy Wales scheme, you will have two charges registered against your property, your standard repayment mortgage together with your Help to Buy Wales shared equity loan. You will have to repay the shared equity loan within 25 years. However, you are free to pay off the shared equity loan at any point within that period.
You can repay either a proportion of the loan, or the loan in its entirety without selling the property – this is known as staircasing. Under the terms of the loan:
- you can staircase at any time after completion
- following any staircasing, the remaining balance of the Help to Buy Wales shared equity loan must be at least 5% of the market value
- you cannot staircase if you are in arrears with your monthly Help to Buy Wales payments, unless those arrears and any other outstanding fees or expenses are paid off at the same time as you staircase
If you are looking to change the ownership of your property, you will need the written permission of Help to Buy (Wales) Ltd. You will need to complete the Change of Ownership Form.
If you are planning to sell your home, make improvements or transfer ownership, you will need the permission of Help to Buy (Wales) Ltd and you will need to complete a Post Sales Instruction Form and you should also read the post-sale information leaflet.
If you are repaying or re-financing your existing financial arrangements i.e. re-mortgaging, you must obtain a market value of the property from an independent valuer who is a qualified member of RICS.
Further information about your Help to Buy Wales agreement can be found in the Help to Buy – Wales : Post sales guide
What is the future of Help to Buy Wales?
Phase 3 of the Help to Buy scheme in Wales will be available from April 2021 until March 2022 with the possibility of a further extension until March 2023, subject to the availability of funding.
From April 2021, under phase 3, properties eligible to be sold with the Help to Buy Wales scheme must not exceed a market value of £250,000. Homebuyers who meet the affordability criteria and lending terms can borrow an equity loan of up to 20% of the sale price of a new build home. Homebuyers must fund at least 80% of the sale price, this will be made up of a mortgage and a minimum 5% cash deposit.
The existing scheme, Phase 2, will close to applications at 5pm on 31st March 2021 (subject to funding availability). For properties to be eligible for Phase 2 funding they must be practically and legally completed by the 23rd December 2021.
You can contact our Help to Buy Wales Accredited Solicitors for further information.
Caroline Barman (firstname.lastname@example.org)
Tel: 01654 711499/01341 243687
Rhiannon Davies-jones (email@example.com)
Tel: 01766 831882/01341 243687