Cymru
Cymorth
Brynu -
Help
Buy -
Wales
i
to
Help to Buy – Wales
Buyer’s Guide
Phase 3 Extension
www.gov.wales/helptobuy
Your guide to a Help to Buy – Wales: Equity Loan 4
What is a Help to Buy – Wales: Equity Loan? 4
Who provides the loan? 4
Key things you should know before taking out a Help to Buy – Wales: Equity Loan 5
How does it work? 6
Am I eligible? 7
Quality standards 8
Lease restrictions on Help to Buy – Wales homes 9
Estate Management Fees 9
How to apply 10
Buying your new home with an equity loan: 11
– Stage 1: Applying 11
– Stage 2: Authority to Proceed 12
– Stage 3: Mortgage offer and exchange of contracts 13
– Stage 4: Completing the purchase 14
How long does it take to buy a new home with an equity loan? 15
Repaying your equity loan 16
– You may pay back more than you borrow 16
– Work out what you need to repay 16
Understanding your interest payments 17
Contents
Help to Buy – Wales Buyers’ Guide2
Differences in interest payments 18
What happens if the Consumer Price Index (CPI) is below 0%? 18
Equity loan fees and costs 19
Help to Buy – Wales: Equity Loan and mortgages 20
Add and remove homebuyers from the equity loan 20
Structural alterations 21
Other restrictions 21
Changes in the housing market could affect your property price 22
Glossary 24
Updated March 2023
3
Your guide to a Help to Buy – Wales:
Equity Loan
This guide provides useful information
about Help to Buy – Wales: Equity Loan
Phase 3 Extension (from April 2023),
a home ownership scheme. It will help
you to understand what is involved in
taking out an equity loan, how it works
and how to apply.
The principles of the Welsh Government’s
Equity Loan scheme are to provide
support to people who want to become
homeowners, who would not otherwise
have access to an affordable mortgage
or be able to get onto the property ladder.
What is Help to Buy – Wales?
Help to Buy – Wales is an equity loan from
the Welsh Government that you put towards
the cost of buying a newly built home.
Help to Buy – Wales aims to provide
support to people, who would not be able
to get onto the property ladder without the
support of the scheme.
If you’re eligible for an equity loan, you can
borrow up to 20% of the market value of a
new home. The market value is:
• the value of the home, as determined
by an independent organisation called
the Royal Institution of Chartered
Surveyors (RICS), or
• the price a home sells for, whichever
is higher.
When you take out an equity loan, you only
pay interest on the amount you borrowed.
You should be aware that the interest
payments you make do not go towards
repaying your equity loan.
You cannot make monthly repayments to
reduce your loan, but you can choose to
repay it all or in part at any time. If you sell
your home, you will need to repay all of
your equity loan.
You can only apply for Help to Buy – Wales
if you reserve your new home with a Help
to Buy – Wales registered homebuilder.
Who provides the loan?
Help to Buy – Wales: shared equity loan
is provided by Help to Buy – Wales Ltd,
the administering agents appointed by the
Welsh Government.
Help to Buy – Wales Buyers’ Guide
4
Key things you should know before taking
out a Help to Buy – Wales: Equity Loan
Help to Buy – Wales: Equity Loan is not
a discount scheme or a price reduction –
the purchase price of the new home will be
the same whether you buy with or without
an equity loan.
The equity loan is not “interest free” –
Wedonotchargeinterestfortherst
5 years of the equity loan, but you will
begin to pay interest from year 6.
The total equity loan amount you repay
is linked to the value of your home at the
point of repayment, and not the amount
you originally borrowed.
A mortgage is an amount of money you
borrow from a lender to put towards the
full asking price of a property. You normally
borrow it for a set amount of time and pay
back a set amount each month, for an
agreed time. There are 2 main types of
mortgage:
• Interest-only – you only pay interest
based on the amount you owe, and
these payments do not reduce how much
you owe. At the end of your mortgage
term, you will still owe the same amount
you borrowed. If you get a Help to Buy –
Wales: Equity Loan, you cannot have an
interest-only mortgage.
• Repayment – you repay the full amount
(capital) borrowed, plus interest.
The amount you owe will decrease
until you repay it all by the end of your
mortgage term. With Help to Buy –
Wales: Equity Loan, you must have a
repayment mortgage. A mortgage uses
your home as security for the debt, so it
is important you’re able to keep up with
mortgage repayments.
You cannot have an equity loan without a
repayment mortgage, which is valid for the
duration of the equity loan.
5
Updated March 2023
How does it work?
With an equity loan, we lend you a
minimum of 10% and up to 20% of the
market value of your newly built home.
The maximum purchase price for an eligible
property under the scheme is £300,000.
You cannot change or negotiate this price.
Yourhomebuilderwillbeabletoconrm
if the home you want to buy is within the
eligible price range.
You must:
• pay a minimum cash deposit of 5% of
the purchase price of your new home
at exchange of contracts
• arrange a repayment mortgage of at
least 25% of the purchase price of your
new home.
An equity loan is secured against your
property in the same way a repayment
mortgage is. The Help to Buy – Wales:
Equity Loan scheme is not regulated by
the Financial Conduct Authority (FCA).
Example of how much your deposit,
mortgage and equity loan may be if you
buy a new home worth £200,000:
Homebuyers
£10k 5% deposit
£40K 20% equity loan
£150k
75% mortgage from repayment
mortgage lender
For the rst 5 years:
• the equity loan is interest free;
• pay a £1 monthly management fee by
Direct Debit.
From year 6:
• pay the £1 monthly management fee;
• pay a monthly interest fee of 1.75% of
the equity loan;
• interest fees will rise each year in April
by the Consumer Price Index (CPI),
plus 2%;
• continue to pay interest until you repay
your loan in full.
You must repay the equity loan in full
when you pay off your repayment mortgage,
sell your home or reach the end of your
loan term, normally 25 years.
You can repay your equity loan in full
at any time.
Ifmakingapartialrepayment,yourrst
partial repayment will need to be at least
10% of the market value of your home,
at that time.
The remaining balance of the Help to Buy –
Wales shared equity loan, must be at least
5% of the market value.
For example, you could repay 10% if you
took out a 20% loan.
Help to Buy – Wales Buyers’ Guide
6
Am I eligible?
You must be able to fund up to 80% of your
selected property through a combination
of a conventional repayment mortgage,
and a minimum cash deposit of 5% of the
purchase price.
Youmusttakeoutarstchargerepayment
mortgage with a qualifying lender.
www.gov.wales/help-buy-wales-
participating-lenders
When you buy your new build home with
an equity loan, you must be able to afford
the monthly fee and interest payments.
The home you purchase must be your
only home.
You must tell us if you or anyone you
are buying with has a connection with
a homebuilder, as this could affect your
eligibility for the equity loan scheme.
The Help to Buy – Wales scheme was
established to provide support to people
who want to become home owners,
who would not otherwise have access
to an affordable mortgage or be able to
get onto the property ladder. Therefore,
if your nancial position shows you can
secure a 90% rst charge mortgage,
without the support of Help to Buy
Wales, then you will not be offered
Help to Buy – Wales assistance. Your
Independent Financial Advisor will be
able to provide you with further advice.
7
Updated March 2023
We aim to make sure that homes sold with
Help to Buy – Wales are of a high standard
and broadband ready.
All our home builders will clearly
communicate any quality marks they have
been awarded or any quality schemes of
which they are a member, for example
Trustmark, in all Help to Buy – Wales
communications and advertisements.
Members of the Home Builders Federation
(HBF) that participate in the star rating
scheme, must clearly communicate that
rating on all Help to Buy – Wales related
communications and advertisements.
Only developers/builders that have a rating
of 4 stars and above will be permitted to be
part of the Help to Buy – Wales scheme.
Members of the Federation of Master
Builders (FMB) must clearly communicate
their membership on all Help to Buy
– Wales related communications and
advertisements.
Home Builders must:
• have a system in place which ensures
homes offered for sale through Help to
Buy – Wales are checked for quality of
constructionandnishduringthebuild
and on completion;
• be clear in all communications with
customers about likely broadband
capability on developments;
• allow buyers to view the actual home
being purchased (with their own surveyor
if desired) before legal completion of
sale.
Our home builders agree to follow:
1. Consumer Code for Home
Builders
All Help to Buy – Wales registered home
builders follow a code of customer care
and standards set out within the Consumer
Code for Home Builders. Find out more
about the code visit
www.consumercode.co.uk
2. Planning permission and
building regulations
Home builders must ensure each eligible
home built during Phase 3 Extension of
Help to Buy – Wales complies with planning
permissions and the Building Regulations in
force in Wales.
Your conveyancer is responsible for making
sure these are evidenced.
3. New Home Warranty
Your home builders must give you a new
home warranty before you complete the
purchase.
You won’t be able to buy your home without
it. The warranty will:
• dealwithdefectsyoumayndwhenyou
move into your new home
• offer you, us and your mortgage lender
protection.
If you have any questions about the new
home warranty, your conveyancer or home
builders will be able to give you more
information.
Quality standards
Help to Buy – Wales Buyers’ Guide
8
Lease restrictions on Help to Buy – Wales
homes
The Welsh Government has set out rules
to protect you from unfair lease terms and
costs when you buy a home.
There are very few Help to Buy – Wales
homes you can buy that will include a lease.
Ifyouarebuyingaatwithalease,check
with your conveyancer that the terms of the
lease meet the requirements of Help to Buy
– Wales.
If you buy a leasehold property, you own
theleaseholdpropertyforaxedperiod.
A lease is a private legal agreement
between you and the freeholder and sets
out the rights and responsibilities of both
parties. There maybe charges and fees
included in a lease. There are only a limited
number of properties that can be purchased
with the support of Help to Buy – Wales.
Home builders can only charge a
peppercorn ground rent for leasehold
homes included in Phase 3 extension of the
Help to Buy – Wales Scheme.
What is Peppercorn Rent?
The new Leasehold Reform (Ground Rent)
Act 2022 limits the amount of ground rent
payable under most new long leases of
residential properties to a peppercorn.
Peppercorn is effectively a notional rent.
Estate Management Fees
Your builder must provide information,
in writing, about the existence, and likely
level of estate charges, before accepting
a deposit on your home.
Your conveyancer will ensure you have
been advised of any fees that may become
due and the likely action that could be taken
if you do not pay these fees.
9
Updated March 2023
How to apply
1. Find and reserve your home
Registered home builders advertise
Help to Buy – Wales homes for sale on their
developments. You must reserve your home
and pay a fee of no more than £500 before
you can apply for an equity loan. This fee
is fully refundable if you’re not eligible for
an equity loan or you do not exchange
contracts.
2. Get professional advice
Help to Buy – Wales Ltd will help you to
apply for an equity loan if you’re eligible
and can afford the equity loan on top of
your other outgoings. However they are
notnancialadvisorsandcannotprovide
you with specialist advice. Therefore before
applying to the scheme you must check that
the equity loan meets your needs and that
you can afford to repay it.
Consider seeking independent advice to
helpyouunderstandyournancialsituation.
You can contact Help to Buy – Wales Ltd –
www.gov.wales/help-buy-wales/contact-us
Help to Buy – Wales Buyers’ Guide10
Buying your new home with
an equity loan
Stage 1: Applying
Find your new home
Search online for new homes for sale
using a Help to Buy – Wales: Equity
Loan. Look for the Help to Buy – Wales,
supported by Welsh Government logo
on registered home builders new home
development sites.
Reserve your home
Reserve your home with the home builder
and pay a fee of no more than £500.
This fee is fully refundable if you’re not
approved for an equity loan. Make sure the
homebuilder gives you a signed copy of the
reservation form, you’ll need it when you
apply for the equity loan.
Get nancial advice
Buying a new home can be a daunting
process, but there are many organisations
that offer free advice. Consider seeking
independentnancialadvice.
Apply for your equity loan
You need to complete a Property
Information Form to apply for an equity
loan. You will need to provide personal and
nancialinformation,suchashousehold
income, the property details, your proposed
repayment mortgage and deposit details.
The information you provide when
you apply must be accurate and true.
False details will lead to delays and may
put you at risk of fraud, which is a criminal
offence.
Return your paperwork
Send your signed Property Information
Form and a copy of the home builder’s
signed reservation form to Help to Buy –
Wales Ltd.
11
Updated March 2023
Stage 2: Authority to Proceed
Know how your nances stack up
Help to Buy – Wales Ltd will check if you’re
eligible for the scheme.
Help to Buy – Wales Ltd will use an
eligibility calculator tool to check your
monthly income and outgoings, including
household bills and estimated mortgage
repayments in the calculations. To be
eligible for the scheme your debt or
outgoings must not exceed 45% of your
household income.
Your repayment mortgage should be less
than 4.5 times your gross annual income.
Help to Buy – Wales Ltd are committed
to responsible lending and ensuring
applicants are able to comfortably
afford the shared equity loan. Therefore:
* There is no exibility on Debt to
Household Income Ratios above 45%.
Apply for a repayment mortgage
You are responsible for arranging your
repayment mortgage. Only apply for your
repayment mortgage once you have the
Authority to Proceed from Help to Buy –
Wales Ltd. If you apply for a repayment
mortgagerstandarenoteligibleto
apply for Help to Buy – Wales equity loan,
you may lose money. Your credit rating may
also be affected if the mortgage lender has
carried out a credit check on you.
Get Authority to Proceed
If your application is approved, Help to
Buy – Wales Ltd will give you the Authority
to Proceed (ATP) to buy your new home.
This is valid for 6 months.
When you have the Authority to Proceed,
your conveyancer will receive legal
guidance and forms to complete. Return
these to Help to Buy – Wales Ltd so you
can buy your home.
Your conveyancer is responsible for
explaining the legal information to you.
A list of conveyancers that have undertaken
Help to Buy training can be found at
www.gov.wales/help-buy-wales/how-
apply
Get the conveyancer’s pack
When you have the Authority to
Proceed, your conveyancer will receive
legal guidance and forms to complete.
Your conveyancer is responsible for
explaining the legal information to you.
Help to Buy – Wales Buyers’ Guide
12
Stage 3: Mortgage offer and
exchange of contracts
Your conveyancer will:
• explain the Help to Buy – Wales:
Equity Loan contract and your legal
responsibilities. They will remind you
that your application must be accurate
and true. False or misleading information
could be fraud. This is a criminal offence
and you may have to repay the equity
loan in full;
• ask you to sign the property sale contract
and the Help to Buy – Wales: Equity
Loan contract;
• make sure your repayment mortgage
offer, property price and deposit are the
same amount as agreed in the Authority
to Proceed;
• ask Help to Buy – Wales Ltd for
permission to exchange contracts.
Help to Buy – Wales Ltd will:
Check all the paperwork is correct and
issue the Authority to Exchange (ATE)
to your conveyancer so they can exchange
contracts.
Exchange of contracts is the process where
you and the seller have all the paper work in
place and you legally agree to buy a home.
When contracts are exchanged, you will
need to pay an exchange deposit of 5% to
the seller. At this point, an agreement to buy
becomes legally binding.
You will:
• pay your deposit and be legally bound
to buy your new home by an agreed
date. You pay 5% cash deposit when
you exchange contracts, even if your
full deposit is more;
• make sure your repayment mortgage
offer does not expire before the
completion date.
Home visits
You can visit your new home once you have
exchanged contracts. Your homebuilder
will arrange this for you. This will give you
achancetoconrmanylast-minutedetails
or changes before you move in. Speak to
your conveyancer or your homebuilder for
more information about home visits.
13
Updated March 2023
Stage 4: Completing the purchase
Pay for your new home on completion:
• you pay the rest of your deposit
(if more than 5%);
• your mortgage lender provides its share
of the funds to buy your new home;
• Help to Buy – Wales Ltd will pay your
equity loan to your conveyancer;
• you legally own your new home, get the
keys and can move in.
Conrm the sale
Your conveyancer contacts Help to Buy –
Wales
Ltdtoconrmthesale.
Registration of interest
Your conveyancer will register a legal
charge on your home for Help to Buy
– Wales Ltd. They will also register a
separate legal charge for your mortgage
lender. This is recorded with HM Land
Registry and will be shown on your
property title deeds.
When you’re ready to sell your home,
you need to let us know. You must pay back
your equity loan and repayment mortgage
before we can remove our legal charge
on the property.
Your home
After you buy your home, Help to Buy –
Wales Ltd will:
• set up your Direct Debit to pay the
£1 monthly management fee;
• arrange for you to pay fees and interest
payments on your equity loan;
• help set up repayments when you’re
ready to repay some or all of your
equity loan.
Your home may be repossessed if you
do not keep up repayments on your
repayment mortgage, equity loan or
other loans secured against it. Consider
seeking independent nancial advice
before making any nancial decisions.
Help to Buy – Wales Buyers’ Guide
14
How long does it take to buy
a new home with an equity
loan?
You have 6 months to exchange contracts
when you get our Authority to Proceed.
You must complete buying your home
within 6 months of exchanging contracts.
When you exchange contracts, you make
a legal commitment to buy the property.
If you change your mind, you may have
to pay costs.
15
Updated March 2023
Repaying your equity loan
When you take out your equity loan,
you agree to repay it in full, plus interest
and management fees.
You must repay your equity loan in full:
• at the end of the equity loan term; or
• when you pay off your repayment
mortgage; or
• when you sell your home; or
• if you do not comply with the terms set
out in the equity loan contract and we
ask you to repay the loan in full.
There are no monthly equity loan
repayments to reduce the total amount
of equity loan you borrow. You can pay
off all or part of your equity loan any time
before then.
You may pay back more than you
borrow
The percentage you borrow is based on the
market value of your new home when you
buy it.
When you repay your loan in full or in part,
the amount you pay back is worked out as
a percentage of the market value at the
time you choose to repay.
If the market value of your home rises,
so does the amount you owe on your equity
loan. And if the value of your home falls,
the amount you owe on your equity loan
falls too.
Your home could be at risk if you do not
keep up with repayments on your mortgage,
so it’s important to consider how you will
manage if your home drops in value.
If your home is worth less than when you
bought it, it may affect your ability to pay
your repayment mortgage. Consider talking
toanancialadviseraboutwhatyoucould
do if this happens.
Work out what you need to repay
You can repay your equity loan in full
at any time.
Ifmakingapartialrepayment,yourrst
partial repayment will need to be at least
10% of the market value of your home,
at that time.
The remaining balance of the Help to
Buy – Wales shared equity loan, must be
at least 5% of the market value.
For example, you could repay 10% if you
took out a 20% loan.
To work out how much you pay back we
need to know the current market value
of your home.
You will need to get a Royal Institution
of Chartered Surveyors (RICS) valuation
report.Aqualiedsurveyorwillestimatethe
value of your home, based on its condition
and the current housing market.
If you are selling your home, we use
the current market value of your home
as determined by a Royal Institution of
Chartered Surveyors (RICS) valuer, or the
price it sells for, whichever is highest. In all
other circumstances the market value will
be determined by RICS valuer.
Please note that the valuation will only be
valid for a period of 3 months and the cost
of the valuation is to be paid for by yourself.
Help to Buy – Wales Buyers’ Guide
16
Understanding your interest payments
Interest is what we charge for lending you
the funds to help you buy your Help to Buy
– Wales home.
Interest payments do not go towards paying
off your equity loan.
• You start to pay interest from year 6,
onthefthanniversarythatyoutook
out your equity loan;
• Yourrstinterestpaymentwillbe1.75%
of the amount you borrowed;
• Your interest will go up each year in April
by the Consumer Price Index (CPI),
plus 2%.
The amount of monthly interest you pay
is worked out by multiplying:
1. the Help to Buy – Wales: Equity Loan
amount (purchase price x equity loan
percentage). The equity loan percentage
will reduce following any part repayment.
2. by the interest rate (in the rst year
this is 1.75%). The interest rate increases
every year by adding CPI plus 2%.
The interest rate from the previous year is
then used to work out the interest rate rise
for the following year.
Payments are worked out as an annual
gure and then divided by 12 equal
instalments to get a monthly interest
payment.
Based on the yearly interest rate rises,
it is possible to show the typical annual
and monthly payments, including interest
and management fees. You will receive
a personalised example which estimates
the fees you’ll pay on your equity loan.
Theguresinthisguideareexamplesonly.
Typical annual and monthly payments,
including interest and management fees,
based on an equity loan in a region of
£40,000 and ination (CPI) of 2.5%:
If the market value of your home at the
time of purchase was £200,000 and you
borrowed a Help to Buy – Wales: Equity
Loan amount of £40,000 (20%), in year 6,
onthefthanniversaryoftakingoutyour
equity loan, the interest rate used to work
out your monthly interest fee would be
1.75%. So the sum is: (£40,000 x 1.75%)
÷ 12 = £58.33 interest every month in
year 6.
How we work out interest rate
increases
Interest rates go up each year in April by
the Consumer Price Index (CPI), plus 2%.
The table below shows how the interest
rate rise is worked out.
Year Interest rate increase
calculation
Interest
rate
1-5 No interest payments 0%
6 Not applicable 1.75%
7
1.75% (year 6 rate) + 0.08%
1.75% (previous interest
rate) x 4.5%
(2.5% CPI + 2%) = 0.08%
(interest increase)
1.83%
8
1.83% (year 7 rate) + 0.08%
1.83% (previous interest
rate) x 4.5% (2.5% CPI
+ 2%) = 0.08% (interest
increase)
1.91%
17
Updated March 2023
Differences in interest payments
You will pay slightly less interest if you take
out an equity loan at the start of the year,
and slightly more interest if you take it
out later.
Your interest payments start in year 6,
onthefthanniversarythatyoutook
out your equity loan if your equity loan
anniversary is between:
• 1 April and 31 December,yourrst
interest rate rise will be the coming April.
For example, if you take out your equity
loan on 1 June 2023, interest payments
will start on 1 June 2028 (year 6) and
the increase in interest will take place in
April 2029. This means your interest will
rise to the next rate sooner.
• 1 January to 31 March,yourrst
interest rate rise will be a year or more
later in the following April. For example,
if you take out your equity loan on
1 January 2024, interest payments will
start from 1 January 2029 (year 6) and
the increase in interest will take place
in April 2029. This means you will pay
a lower rate of interest for slightly
longer.
What happens if the Consumer Price
Index (CPI) is below 0%?
CPI can go up and down.
If when we work out your interest, CPI is
0%orless,agureof0%willbeusedfor
CPI to calculate your interest rate rise.
This means the interest rate increase will
be a minimum of 2%. CPI will never be less
than 0% when used to work out the interest
rate increase.
Example:
Where CPI is equal to or less than 0%,
we use 0% to work out the interest
rate rise:
0% + 2% = 2% interest rate rise.
Help to Buy – Wales Buyers’ Guide
18
Equity loan fees and costs
You agree to pay the fees and costs when
you take out the equity loan, and these
include:
Monthly management fee
When your equity loan starts you must
pay a £1 monthly fee. This is paid by
Direct Debit for the life of your equity loan.
For example, if you have the equity loan for
5 years (60 months) you will pay a total of
£60 in management fees.
Interest
You start to pay interest from year 6, on the
fthanniversaryofyourequityloanandthis
is calculated at a rate of 1.75% of the equity
loan amount. The interest rate will rise each
year thereafter in April by the Consumer
Price Index (CPI), plus 2%.
The interest you pay during the life of the
equity loan does not reduce the amount
you owe.
The amount of interest you pay will reduce
if you make part repayments. Interest will
be worked out on the amount of equity loan
left to pay.
Administration fees
You may be required to pay administration
fees, for example if you make changes to,
or redeem, your equity loan.
A full list of charges will be available from
Help to Buy – Wales.
In addition to administration fees, you are
responsible for paying other costs and fees,
such as a Royal Institution of Chartered
Surveyors (RICS) valuation report,
legal fees, mortgage arrangement fees.
Costs for late payment
You may be charged interest on overdue
money you owe us. Interest is worked out
based on the amount you owe. Interest is
applied every day until the money you owe
is paid in full. You may also be asked to
pay other reasonable costs that we have
incurred, if we need to take action against
you.
We collect interest and management fee
payments by Direct Debit. This helps to
keep your payment details up to date.
19
Updated March 2023
Help to Buy: Equity Loan
and mortgages
Help to Buy – Wales: Equity Loan normally
has a term of 25 years. If you choose to
switch lenders to get a better deal on your
repayment mortgage, either with your
current or a new lender, you will need to
getourpermissionrst.
Your lender must be a qualifying lender.
You can access the list of qualifying lenders
here www.gov.wales/help-buy-wales-
participating-lenders
If you want to borrow more on your
mortgage, you will need to meet certain
conditions.
You can only borrow more when you
remortgage if you use the money to pay:
• for repayment of all or part of your
equity loan;
• for structural alterations on medical
grounds, if we agree to it;
• to remove or add a homebuyer to the
equity loan agreement (Transfer of
Equity);
• for other personal circumstances that
you agree with us.
Add and remove homebuyers
from the equity loan
With our permission, you can add or
remove a homebuyer from the equity loan.
Homebuyers who are added must meet
our Help to Buy – Wales eligibility criteria.
One of the homebuyers named, must stay
the same as when the equity loan was
taken out.
Help to Buy – Wales Buyers’ Guide
20
Structural alterations
Help to Buy – Wales homes are for buyers,
now and in the future. We want to make
sure they are always affordable.
Making structural alterations to your home
can increase its market value.
You cannot make structural alterations to
your home without our permission, such as
adding an extension or converting a
bedroom into a bathroom.
We will only give permission to make
structural alterations on medical grounds.
The equity loan is linked to the value of your
home. So, if you make structural alterations
without our permission and it increases the
value of your home, the equity loan amount
you owe will increase.
If we give permission to make structural
alterations and the value of your home
increases, we will not consider the value of
that alteration when we work out how much
you owe on your equity loan.
Redecoratingorttinganewkitchenor
bathroom are not structural alterations,
and you do not need our permission to
do this.
You have the option to repay your equity
loan before you make structural alterations.
Other restrictions
You are not allowed to sublet your home
without our consent.
Like your repayment mortgage, you must
have building insurance for your home,
keep it in a good state of repair and comply
with other conditions.
21
Updated March 2023
Start of
year
Property
price
(%) increase
Property price Homebuyer
entitlement:
80%* of property
value
Help to Buy
entitlement:
20% of property
value
1 0% £200,000 £160,000 £40,000
2 2% £204,000 £163,200 £40,800
3 2% £208,080 £166,464 £41,616
4 2% £212,242 £169,793 £42,448
5 2% £216,486 £173,189 £43,297
6 2% £220,816 £176,653 £44,163
* This entitlement excludes any balance you owe on your repayment mortgage
Changes in the housing market could
affect your property price
Changes in the housing market means that house prices can go up and down.
These examples show what could happen if a property price increases.
Increase in a home
In this example, the homebuyer has:
Property value £200,000
Homebuyer’s deposit £10,000 (5%)
Equity loan % £40,000 (20%)
Repayment mortgage £150,000 (75%)
This assumes the property value increases
by 2% every year. If you sell your home at
the start of year 6, you would need to repay
£44,163.
Changes in the housing market could affect
your property price.
Changes in the housing market means that
house prices can go up and down.
Help to Buy – Wales Buyers’ Guide
22
This example shows what could happen
if a property price decreases.
Example 1: Decrease in a home
In this example, the homebuyer has:
Property value £200,000
Homebuyer’s deposit £10,000 (5%)
Equity loan % £40,000 (20%)
Repayment mortgage £150,000 (75%)
This assumes the property value decreases
by 5% every year. If you sell your home at
the start of year 6, you would need to repay
£30,951 (20% of the sale price) to settle
the equity loan. Since the sale price of your
home in this example is less than when you
bought it, it may affect your ability to pay
your repayment mortgage and the Help to
Buy – Wales: Equity Loan.
Start of
year
Property
price
(%) increase
Property price Homebuyer
entitlement:
80%* of property
value
Help to Buy
entitlement:
20% of property
value
1 0% £200,000 £160,000 £40,000
2 -5% £190,000 £152,000 £38,000
3 -5% £180,500 £144,400 £36,100
4 -5% £171,475 £137,180 £34,295
5 -5% £162,901 £130,321 £32,580
6 -5% £154,756 £123,805 £30,951
* This entitlement excludes any balance you owe on your repayment mortgage
23
Updated March 2023
Glossary
Capital repayments
Capital is the money you borrow; interest is
the charge made by the lender (in this case,
Help to Buy Wales Ltd) on the amount
you owe.
Completion
Thisisthenalstageinthesaleofa
property, and the point at which it legally
changes ownership to you, the homebuyer.
Consumer Prices Index (CPI)
CPI is a government annual measure of
ination.CPIismeasuredatdifferentpoints
in the year.
We use the September measurement and
apply it to our interest rate rise every April.
Deposit
A house deposit is usually an upfront
payment which is normally a percentage
of the house price and not included in the
mortgage. In the case of a Help to Buy
Wales home, the deposit at exchange of
contracts must be 5% of the price of the
home.
A deposit is your equity in the house you
buy.
Exchange of contracts
Where you and the seller have all the
paperwork in place, you legally agree to buy
a home. When contracts are exchanged,
you’ll need to pay an exchange deposit of
5% to the seller. At this point, an agreement
to buy becomes legally binding.
Interest
Interest is the cost of borrowing money.
You will usually pay interest for borrowing
money, such as an equity loan. Interest
is usually shown as a percentage of the
amount you borrow. This percentage is
called the interest rate. The higher the rate
of interest, the more interest you pay back.
For example, on £100 at a 5% interest rate
you’ll pay £5 in interest per annum.
Leasehold
You only own a leasehold property for
axedperiod.Aleaseisaprivatelegal
agreement between you and the freeholder
and sets out the rights and responsibilities
of both parties. There may be charges and
fees included in a lease.
There are only a limited number of
leasehold properties that can be purchased
with the support of Help to Buy – Wales.
Market value
The value of a Help to Buy – Wales
home as determined by an independent
organisation called the Royal Institution of
Chartered Surveyors (RICS) valuer, or the
price a home sells for, whichever is highest.
Help to Buy – Wales Buyers’ Guide
24
Mortgage
This is an amount of money you borrow
from a lender to put towards the full asking
price of a property. You normally borrow it
for a set amount of time and pay back a set
amount each month, for an agreed time.
There are 2 main types of mortgage:
• Interest-only – you only pay interest
based on the amount you owe, and these
payments do not reduce how much you
owe. At the end of your mortgage term,
you will still owe the same amount you
borrowed. If you get a Help to Buy –
Wales: Equity Loan, you cannot have
an interest-only mortgage.
• Repayment – you repay the full amount
(capital) borrowed, plus interest.
The amount you owe will decrease
until you repay it all by the end of your
mortgage term.
With Help to Buy – Wales: Equity Loan,
you must have a repayment mortgage.
A mortgage uses your home as security
for the debt, so it is important you’re able
to keep up with mortgage repayments.
Net disposable income
The amount of money left over from your
wages or salary that is available to invest,
save or spend as you please, after bills
and expenses.
New build or new home
A newly built home, including converted
commercial premises and conversions
which have not been used as residential
dwellings before conversion. Homes split
intoatsarenotincluded.Homeswhich
have been previously occupied either by an
owner occupier or a tenant before sale may
not be purchased with Help to Buy.
Part repayment
A minimum voluntary payment of 10%
of the current market value of the home,
paid on top of your regular monthly interest
payments. This will reduce the amount you
owe on the equity loan.
You can repay your equity loan in full
at any time.
Ifmakingapartialrepayment,yourrst
partial repayment will need to be at least
10% of the market value of your home,
at that time.
The remining balance of the Help to Buy –
Wales shared equity loan, must be at least
5% of the market value.
For example, you could repay 10% if you
took out a 20% loan.
Sublet
You are unable to rent out your entire
house to another person/tenant when you
buy a home with Help to Buy – Wales.
You can rent out rooms to lodgers with the
permission of Help to Buy – Wales Ltd,
but you must continue to live in your Help
to Buy – Wales home.
25
Updated March 2023
To apply for a Help to Buy – Wales:
Equity Loan, visit:
www.gov.wales/help-buy-wales/how-apply
This guide is for information only and must
not be considered advice. Consider seeking
independentnancialadvicebeforemaking
anynancialdecisionsonwhethertheHelp
to Buy – Wales: Equity Loan is right for you.
Please be aware that investments can go
down as well as up and you may get back
less than you invested.
Your home may be repossessed if you do
not keep up repayments on your mortgage,
equity loan and other loans secured
against it.
© Crown copyright 2023, Welsh Government, WG47147, Digital ISBN 978-1-80535-632-5
Mae’r ddogfen hon ar gael yn Gymraeg hefyd / This document is also available in Welsh
Rydym yn croesawu gohebiaeth a galwadau ffôn yn Gymraeg / We welcome correspondence and telephone calls in Welsh
Help to Buy – Wales Buyers’ Guide
26