Thanks to this Welsh government scheme, equity loans are now available for first time
buyers and second time movers. You could be moving into your brand new home with only a 5% deposit!
Help to buy Wales shared equity loans are available to both first-time buyers and home movers
who wish to purchase a new build home worth up to £300,000.
The buyer must contribute a deposit equal to 5% of the property price, and the Welsh Government
(through the Help to Buy Wales scheme) will fund a shared equity loan for up to 20% of the purchase price.
As the buyer, you must now only need to secure up to 75% mortgage to cover the remaining balance
from your bank or building society.
From the time you receive the shared equity loan, you will be charged an administration fee of
£1 per month for the first 5 years of owning your home.
- Your dream home is worth £200,000
- You need to contribute at least 5% of the property price as a deposit: £10k
- The Welsh government will give you a shared equity loan for up to 20% of the price: £40k
- The mortgage lender. You will need a mortgage of up to 75% to cover the rest: £150k
Myths of Help to Buy:
- It’s just for first time buyers
- The Help to Buy initiative is available for all home buyers, not just for first time buyers. However, the property
purchased must be your only residence and it is no available to assist buy-to-let investors. You cannot rent our your existing home and buy a second home through Help to Buy
- I need to pay back the loan after five years
- The help to buy equity loan is interest free for the first five years. After this you will be required to pay an
interest fee of 1.75% of the amount of your Help to Buy shared equity loan at the time you purchased your property, rising each year after that by the increase (if any) in the Retail Price Index. The
repayments you make will sit along your mortgage repayments. The loan itself is repayable after 25 years or on the sale of the property if earlier.
- I won’t own my house
- This is not true. A Help to Buy Mortgage Guarantee is essentially the same as a traditional 95% repayment mortgage,
with all the usual terms and conditions between you and the lender. In reality, some may not even notice it is a Help to Buy mortgage, other than being a 95% loan to value.