Help to Buy in Wales
There are Help to Buy schemes for each country in the UK. This guide will explore Help to Buy Wales. Read on to discover how it works, and how you can apply for it.
How is it different?
There are few variations between the help to buy Wales, and its English equivalent. The biggest difference is the maximum value of the house available with the scheme. The maximum value in Wales is £300,000. However, in England the maximum value is £600,000, and in Scotland it is £200,000. The equity loan available is 20% in both England and Wales, while in Scotland it is only 15% of the property value. Similar to England, the equity loan from help to buy Wales starts to accrue interest from year 6 onwards.
How help to buy in Wales works
You will need to pay a deposit of 5%. Subsequently you will only need a mortgage loan to value ratio of 75%. The remaining 20% of the property will be held by the government as part of the shared equity loan.
However, whilst in this agreement you will have complete title to your home. This means that you’ have full responsibility for you home. This will include paying your mortgage, various insurances, repairs and maintenance, council tax and more.
Are you eligible
Firstly, you must be buying a home in Wales that is worth less that £300,000, and from an approved provider. Secondly, you must be providing a 5% deposit. However, the combination of your deposit and your mortgage must combine to be 80% of the property value. Thirdly, you must not own any other property. As well as this, you must not be renting your current home with the intention of buying to let this property. Finally, you must not sublet any part of the home your are buying through the scheme.
How to apply for help to buy Wales
The first step is to find your home. For this you will need to contact registered housebuilders that offer help to buy homes. It is also recommended to get in touch with a Financial Advisor to make sure you are eligible. You will also need legal representation, and check they are registered on the panel of accredited conveyancers. After this, Help to Buy Wales will check you can afford your mortgage and other criteria. If you pass these checks, you will be granted “Authority to Proceed” within four days of you filling out the neseccary forms. This incudes a completed Property Information Form, along with three months of payslips. Your legal representation can help you proceed from there.
Once your mortgage contract, deposit, “Authority to Proceed” and other documents have been checked, you’ll be able to move forward with the purchase of the property. This will involve the lender and Help to Buy Wales transferring their funds. Once the property has been purchased, Help to Buy Wales will receive confirmation of their share in your property.
Typically, this whole process can be completed within a month, with the maximum time limit normally around three months.
The loan needs to be repaid within 25 years, however, you are able to repay at any time before then. You are able to either repay the loan off in full, or repay the loan in smaller portions. This is called “staircasing”. Eventually, this will lead to you owning the property outright. Before staircasing, you will need to get the property valued to make sure you are repaying the correct amount. As well as this, there may be additional administration fees to pay.
Alternatively, if you sell the property before you have repayed the loan, then you will have to repay in full. The loan is a percentage of the property value, so if you still have to repay 20%, and you sell the property for £200,000, then you will have to repay £40,000.
If you are unsure about how to proceed, there is some information on the government website. For a full explanation and advice, get in touch with an expert Promise Money advisor today.
Talk to a Promise Money adviser for more details
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