Help to Buy Scheme - Wales

As of January 2014 the Welsh Government has unveiled its new Help to Buy Scheme in a bid to boost the Welsh housing economy. Since the recent economic crisis, mortgage lenders have been very cautious about lending funds to prospective buyers and have been asking for larger deposits. The Help to Buy Wales scheme is designed to provide additional funds to prospective buyers so they can meet deposit requirements for mortgage companies. The scheme will do this by providing a shared equity loan to buyers of new-build houses.

The scheme allows buyers to obtain a mortgage with only a 5% deposit of the purchase price. The Help to Buy Wales (HtBW) scheme will then contribute up to a maximum of 20% of the purchase price. The main advantage of this scheme is that it puts people in a position to obtain a mortgage without having to save up for such a big deposit.

There are however limitations on the scheme and it will not be available in any of the following scenarios:

• those who can not afford a 5% deposit
•   those wishing to purchase a house which isn’t a new-build
•  those who currently own another house and wish to purchase a second
• those who wish to buy-to-let.
•  it must also be through a builder who is registered through the scheme.

A buyer must apply for the scheme through the HtBW website. HtBW will then assess the application and give authority to proceed if they deem your application affordable. After completion of the purchase of the property, HtBW register a legal charge against the property securing the amount they have contributed to the purchase. 

The loan is interest free for the first five years. After five years, the borrower is required to pay interest at 1.75% of the market value of the property at the time they purchased it, multiplied by the proportion of the HtBW loan bears to the market value of the property at the time purchased. Interest will also increase by Retail Price Index plus 1% from 1 April following the fifth year of the loan and each 1 April after that. There is also a £1 monthly fee which is a management fee payable to HtBW.

In conclusion, the scheme provides an opportunity to those looking to buy a new property who can afford mortgage repayments but just not the opening deposit. The initiative is only running until March 2016 but may finish earlier if all the funding is taken up. Allington Hughes can assist you with all steps of the transaction, providing expert legal advice to assist with what can be an exciting experience.

For more information on the Help to Buy Wales Scheme, or any other matter, please contact one of our offices on 01978 291000 for Wrexham, 01244 312166 for Chester or 01492 641222 for Llanrwst.

The Conveyancing Team in all three of our offices can assist with full details on all matters relating to the sale or purchase of a property.