Help to Buy explained Help to Buy (Wales)

Help to Buy (Wales)

Help to Buy (Wales) is available on new build homes priced up to £300,000

Help to Buy (Wales) helps people with small deposits to buy property in Wales. Read our guide to understand how it works.

What is Help to Buy (Wales)?

Help to Buy (Wales) is an equity loan scheme designed to help first-time buyers and existing homeowners in Wales buy new-build properties with deposits of as little as 5%.

To use the scheme, you'll need to be buying a new-build home priced up to £300,000, and have a minimum deposit of 5% saved up.

The Welsh government will provide a loan of up to 20% of the property's value, meaning you'll only need to get a mortgage for the remaining 75% (assuming you have a deposit of 5%). This could help you unlock better rates from lenders.

Here's an example of how you could buy a home for £200,000 using Help to Buy (Wales):

  • House price: £200,000
  • Deposit (5%): £10,000
  • Equity loan (20%): £40,000
  • Mortgage (75%): £150,000

Before taking the plunge, it's useful to know what kind of mortgage options are available to you. For independent, personalised advice you can call Which? Mortgage Advisers on 0808 252 7987 for a free consultation with impartial experts.

How does Help to Buy (Wales) work?

Help to Buy (Wales) works slightly differently from the English and Scottish equivalents. 

The biggest difference is that the equity loan provided by the government is interest-free for the first five years. Interest is then charged at 1.75% in year six.

After the sixth year, the interest rate will increase in line with the Retail Prices Index, plus 1%. You'll also be charged an administration fee of £1 a month. 

Are there any restrictions with Help to Buy (Wales)?

  • The scheme can only be used to buy new-build and off-plan properties. Bear in mind that if you buy off-plan you'll generally need to complete no more than six months after exchanging contracts, but do your research first as some mortgage offers have shorter expiration dates. 
  • You won't be able to let a home bought using Help to Buy (Wales) - it has to be your main residence.
  • If you sell the house before paying the loan back, the government will be entitled to a proportional share of its equity. So if you sold the house in the example mentioned earlier for £210,000, having borrowed 20% of the original buying price (£40,000), you'd need to pay the government 20% of the price you sold for (£42,000).

Find out more: what is a mortgage? - learn the basics about different types of mortgage with our video guide

Can I buy a bigger stake in my home using Help to Buy (Wales)?

Yes, you can increase your share of the property at any time using a process called 'staircasing'. 

Staircasing can be a great route towards full ownership, but you'll need to buy a minimum 'chunk' of 10% of the home at a time.

There can be other costs involved, too. You'll need to have the property independently valued before you increase your share, and you might also have to pay admin and legal fees.

Are there any alternatives to Help to Buy (Wales)?

Another option for buyers with small deposits in Wales is the UK-wide Help to Buy mortgage guarantee scheme.

Through this scheme, the government offers mortgage lenders a guarantee on high loan-to-value mortgages, allowing buyers with small deposits to be seen as a less risky proposition.

Help to Buy (Wales): what's next?

Launched in January 2014, the first phase of Help to Buy (Wales) was popular. In its first two years more than 2,400 homes were purchased using the scheme, with 1,784 of these going to first-time buyers, according to government data.

The Welsh government announced in December 2015 that it would invest up to £290m in a second phase of Help to Buy (Wales), to support the construction of up to 6,000 additional homes by 2021.

More on this:

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.