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Can I Get a Help to Buy Mortgage in Wales?

Looking to use Help to Buy to purchase a Welsh home, but unclear how the scheme works in this part of the UK? The Revolution guide provides all the pertinent information to help you keep moving forward with your application.

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Can I Get a Help to Buy Mortgage in Wales?

With regional differences throughout the UK, it can be challenging to know whether you are eligible for the Help to Buy scheme.

Here we'll run through how Help to Buy works in Wales, what you can borrow, and the criteria that lenders will assess.

For assistance with finding an affordable Help to Buy loan in Wales, give us a call on 0330 304 3040 or email at [email protected].

How Does Help to Buy Wales Work?

Similarly to the English scheme, Help to Buy is a government-backed loan intended to help first-time buyers and home movers find affordable lending to purchase a new-build property.

Currently, the Welsh scheme is due to run until 2021 with some limitations on new applicants until 2023, although that may be extended.

The scheme offers an equity loan for up to 20% of the value of a property to use as a deposit, along with a required 5% minimum deposit from the applicant.

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Based On Your Yearly Income, You May Be Able To Borrow

This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.

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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

What Does the Help to Buy Scheme Cost in Wales?

The equity loan is interest-free for five years. You'll need to purchase a property from a registered developer or builder, and it must be within a maximum £300,000 value.

There are no means-testing requirements for the mortgage, although you must be resident in the UK. You can also buy out the equity loan in stages, meaning you pay less interest after five years, and own a larger proportion of the property - this is referred to as staircasing.

You can buy out the equity loan gradually until you have paid it off and own all of the property or can refinance your Help to Buy mortgage to pay it back in full.

Illustration:

You are buying a property worth £200,000, and have the 5% minimum deposit.
You take out a Help to Buy equity loan for 15% of the value, to make up a 20% deposit.
You borrow £40,000 from the government, pay a £10,000 deposit, and take out a mortgage for the £150,000 balance.

How Do I Apply for Help to Buy in Wales?

The process is no more complicated than any other mortgage; the extra step is that your new-build property has to be built by a registered developer, and you'll need to apply for the equity loan before you can take out a mortgage.

Here's how it works:

Firstly, you'll need to identify a new-build property you wish to buy. It might already have been built by a Help to Buy Wales registered developer, or might be under construction.
Next, apply to Help to Buy Wales for the equity loan you require.
If your application is approved, you can apply for a Help to Buy mortgage with an appropriate lender.
Should that application also be approved, you can purchase the property.

Can I Remortgage Through Help to Buy in Wales?

You can, and remortgaging a Help to Buy mortgage isn't any different from a standard remortgage.

If you haven't repaid the equity loan, it simply switches over to the new mortgage.

What are the Benefits of the Help to Buy Scheme in Wales?

There are multiple reasons people choose the Help to Buy scheme, often to get onto the property ladder for the first time:

You need a smaller deposit, with the minimum being 5% of the purchase price.
Mortgages are more affordable, with a lower LTV and therefore lower interest rates.
Monthly repayments are lower since you'll be paying interest only on the mortgage proportion of the financing, with no interest on the loan for the first five years.
You have the flexibility of deciding when to pay back the loan, or whether to pay it back gradually over time or all in one lump sum.
The sooner you pay back the equity loan, the less you pay back in total - if you pay it back after year five in full, you pay no interest at all.

Are there any Pitfalls to Using Help to Buy in Wales?

Potentially, yes:

You can only buy a property through a registered builder or developer, and it must be a new-build property.
Your mortgage lenders need to be signed up to the Help to Buy scheme.
If you don't pay back the government loan after the fifth year, it can get expensive with interest charged at 1.75% in year six, and increasing every year after that by inflation rates plus 1%.
There is the potential to end up with a negative equity situation - if the value of your new-build falls dramatically, you'll still need to pay back the loan and the mortgage.
If you do not repay the loan, it remains payable at the same percentage of the value of the property. Therefore, if you sell the house and it has risen in value by 20%, so too will the equity loan value you need to pay back.
You may need permission to make significant changes to the property, or if you wish to let it out.
In time, Help to Buy terms are subject to change, and therefore it is essential to stay up to date with any new announcements

How Long does a Help to Buy Welsh Mortgage Run for?

The equity loan needs to be paid back in 25 years, or whenever you choose to sell the house.

If you pay it off sooner, you will avoid paying the interest fees that start in year six and increase every year after that.

The mortgage itself is dependent on what terms you apply for - typically, a residential mortgage runs for 25 years, although this can be longer or shorter.

What are the Eligibility criteria for Help to Buy in Wales?

There are several conditions you'll need to meet to be able to apply for Help to Buy:

You need at least a 5% deposit available.
Your property must be bought from a registered developer.
You must be a UK resident.
Your mortgage needs to be on a repayment basis, and be with a registered lender.
The property cannot be worth more than £300,000.
You need to raise the mortgage proportion of the property value.
You cannot sublet the property without permission.
You can't already own an investment property, or keep an existing property and start letting out when you move into Help to Buy home.

How is Help to Buy Wales Different from the Scheme in England?

In England, your Help to Buy mortgage needs to be organised through a registered advisor, and you can buy a property up to £600,000.

In Scotland, you don't ever need to pay interest on the equity loan, but can buy a lower value property up to £200,000 as a maximum.

In Northern Ireland, there isn't a directly comparable scheme, but there are other options such as Rent to Own.

Professional Support with Help to Buy Mortgages in Wales

For more advice about Help to Buy mortgages in Wales, give mortgage advisors a call on 0330 304 3040, or email us at [email protected].

As a whole-of-market, independent broker, we help thousands of applicants find competitive lending and secure the Help to Buy mortgage they need to be able to proceed with their property purchase.

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Can I Get a Help to Buy Mortgage in Wales?