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5 ways that Help to Buy Wales could help you secure your first home

Getting onto the property ladder can seem daunting. Luckily, Welsh Government’s Help to Buy – Wales scheme is giving a helping hand to first-time buyers in Wales — including David Wilson Homes South Wales’ newest residents, Cameron and Alice.

Help to Buy – Wales enabled the young couple, in their early twenties, to complete on their new-build Barratt home in December — with the scheme providing eligible applicants with an equity loan of up to 20% of the market value of the property, up to the value of £300,000.

Talking about their experience, Cameron said: “My parents recently moved to David Wison’s Nant Y Castell development in Caldicot — and on our first visit, we immediately knew this was where we wanted to live, too. After years of renting in Bristol, Help to Buy gave us the boost we needed to secure our first home here in Wales — and Melanie and the rest of the Barratt sales team guided us through the process effortlessly.

“We are loving our new-found freedom as homeowners — as well as the process of putting our own stamp on the 2-bedroom house. Plus, our Mastiff cross, Lola, is in her element with so much green space surrounding the development!”

Here are five factors that could help you secure your first home too — using Help to Buy – Wales…

1.     Only a 5% deposit is needed

Saving for a deposit can take years — especially if you want to qualify for a low loan-to-value (LTV) mortgage and gain access to the most competitive mortgage rates.

With an equity loan available, Help to Buy – Wales allows you to purchase a home with a smaller mortgage, at a lower LTV — even if you only have a 5% deposit. Your first home could therefore be yours much sooner than you think.

2.     Access to lower mortgage rates

A 5% deposit would normally limit you to a 95% LTV mortgage — meaning you wouldn’t be able to access the best rates, which could risk making repayments unaffordable.

However, if using Help to Buy – Wales to access a 20% equity loan, you could start looking at 75% LTV mortgages instead — offering much more competitive rates.

3.     The equity loan is interest-free for five years

With an interest-free loan period of five years, the financial strain of repaying the equity loan at the same time as your mortgage is removed in the short term.

The early years of mortgage repayments are usually the toughest — particularly if your career is still developing or you’re raising a family, so this breathing space might be welcome news.

But remember, you will have to pay a monthly management fee of £1 until the loan is repaid.

4.     There’s a low interest rate on the loan when you do start to pay

The 1.75% interest rate that is eventually charged on the equity loan in year six tends to stack up well against the best personal loan rates — making it an affordable repayment option for many.

5.     The equity loan can be paid off any time (within 25 years)

The shared equity loan needs to be repaid within 25 years. However, you are free to pay off the loan at any point within that period.

You can reduce what you owe at any time by paying off either a proportion of the equity loan (equivalent to at least 10% of the current value of your home), or the entire amount in full, without selling the property. This is known as ‘staircasing’.

And if you manage to fully repay your loan within five years, you won’t pay any interest at all!

Think Help to Buy – Wales might be able to help you onto the property ladder? Here’s a handy list of the Barratt and David Wilson Homes properties in South Wales which are eligible for the scheme (correct as at 23 January 2024):
·       Nant Y Castell in Caldicot has two beautiful 2-bedroom homes available.
·       Parc Fferm Wen in St Athan has a range of 2 and 3-bedroom properties available.
·       Pentref Llewelyn in Penllergaer has a range of 3 and 4-bedroom homes available with the scheme.
·       Brunel Quarter in Chepstow has a range of eligible properties coming soon.

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