Help to Buy - Wales allows eligible purchasers to buy new-build homes with assistance from the Welsh Government in the form of a shared equity loan.
What does this mean in practice?
Help to Buy - Wales shared equity loans are available to both first-time buyers and home movers wishing to purchase new-build homes worth up to £300,000.
With Help to Buy - Wales:
If in the future the home in the table above sold for £210,000 the buyer would get £168,000 (80%, based on their mortgage and the cash deposit) and pay back £42,000 on the shared equity loan (20%).
The buyer will pay off their mortgage using the proceeds of the sale and will then repay the Help to Buy - Wales shared equity loan.
Are there any fees attached to the shared equity loan?
From the time a buyer receives the shared equity loan they will be charged a small administration fee of £1 per month.
Then, in the 6th year, they'll be charged interest of 1.75% per annum of the original shared equity loan amount. After this, the interest will increase every year. This increase is worked out by using the Retail Prices Index plus 1%.
All buyers will be contacted before the shared equity loan interest starts and they'll also be sent a statement about their shared equity loan each year.
The fees do not count towards paying back the shared equity loan.