Homebuy scheme (Wales): how it works

The Homebuy scheme in Wales is designed to help people who may struggle to buy a home in the usual way. Instead of relying on a large deposit, you may be able to use an equity loan alongside a mortgage.

This guide explains how the Homebuy equity loan works, what you typically need alongside it, and the kinds of property and lease rules that can affect whether a home is suitable.

In this guide

• What is Homebuy?
• How the Homebuy scheme works
• Repaying the equity loan
• Who’s eligible
• Getting a mortgage with Homebuy
• Properties you can buy with Homebuy
• How the application process generally works
• Practical considerations (surveys, improvements, and what happens later)

What is Homebuy?

Homebuy is a Welsh housing scheme where an equity loan is provided to help you buy a home.

In most cases, the scheme is aimed at people who:

• cannot afford to buy a suitable home without help
• need housing that meets their circumstances
• may be looking for a route into homeownership rather than renting long-term

The equity loan is typically delivered through housing associations (with funding routes involving local authorities).

How does the Homebuy scheme work?

Homebuy works by splitting the purchase into two parts:

1. An interest-free equity loan (often between 30% and 50% of the purchase price)
2. Your contribution, funded by a mortgage and/or savings (often covering the remaining 70% to 50%)

The equity loan (interest-free, but not “free”)

The equity loan is usually described as interest-free, but it is still repayable.

Key points to understand:

• You repay the loan later, commonly when you sell the property.
• The amount repaid can be linked to the value of the home at the time repayment is due.
• If the property value increases, the repayment amount can increase compared with the original loan.
• If the property value decreases, the repayment amount can be lower than the original loan.

Why valuation matters

Because the equity loan is connected to the property’s value, the housing association will typically require an independent valuation. That valuation helps determine the equity loan “share” and therefore how much is repaid when the loan is settled.

You should also expect there may be fees associated with the valuation process.

Repaying a Homebuy loan

In broad terms, the equity loan is repaid when you no longer own the property. Common scenarios include:

• Selling the home: the equity loan is repaid from the sale proceeds.
• Paying it off earlier: in some circumstances, you may be able to repay the equity loan before you sell (for example, if you have funds available).

The housing association will calculate its share of the property based on the valuation approach used for the scheme.

Who’s eligible for the Homebuy scheme?

Eligibility can vary depending on local rules and the housing association involved, but the scheme is generally aimed at people who:

• cannot afford to buy a suitable home without help (including support from friends and family)
• do not have suitable housing, or can no longer live in their current home
• meet the scheme’s requirements around housing need

There are also situations where applications may be refused or not accepted, such as where there are current rent arrears or where there has been a serious issue with a previous tenancy arrangement.

Buying with others

It may be possible to buy with more than one person. However, the combined household income and savings usually need to be sufficient to cover the mortgage and other purchase costs.

Getting a mortgage with Homebuy

Homebuy is not a replacement for a mortgage. You typically still need a mortgage to fund your share of the purchase.

When planning for a mortgage alongside an equity loan, consider:

• Mortgage affordability: lenders will assess affordability based on your income, outgoings, and overall circumstances.
• Deposit and costs: even with an equity loan, you may still need savings for costs such as legal fees, surveys, and other buying expenses.
• Mortgage type and lender choice: the scheme may require that the mortgage is provided by certain types of lenders. Housing associations may also have preferences or restrictions, so it’s important to confirm what’s acceptable.

A mortgage broker can help you understand how the equity loan may affect your overall borrowing needs and the kind of mortgage structure that may fit your situation.

Properties you can buy with Homebuy

Not every property will be suitable for Homebuy. Typical property considerations include:

• Location: the property must be in an area designated for the scheme by the relevant local authority.
• Price limits: there are usually maximum purchase prices that can vary by area and household circumstances.
• Move-in readiness: the property should be suitable to live in straight away.
• Leasehold rules (if applicable): if you’re buying a leasehold property (for example, many flats), there may be requirements around the length of the lease.
• Construction timelines (for new-build situations): where a property is under construction, there may be deadlines around exchange and completion.

Properties that are usually not suitable

Homebuy may not be used for certain types of purchases, such as:

• properties that are discounted by a housing association
• homes with any element of commercial use
• properties owned by close family members or certain connected parties

Because rules can be detailed, the housing association’s approval process is central to confirming whether a specific property can be used.

How do you apply for the Homebuy scheme?

While the exact steps can differ, the process generally involves:

1. Identifying participating landlords in your area (housing associations that operate the scheme).
2. Submitting an application through the relevant housing association.
3. Providing evidence requested by the association (for example, information about income, savings, and housing circumstances).
4. Receiving a decision in writing on whether you qualify.

Once accepted

If you’re accepted for the scheme, you can usually:

• look for a suitable home within the scheme’s location and price limits
• arrange a mortgage for your share of the purchase price
• obtain a survey to help identify potential issues with the property
• seek the housing association’s approval for the specific property before purchase
• proceed with the legal process, with the equity loan typically arranged through the purchase process

Practical considerations

Surveys and hidden issues

Even when the scheme provides an equity loan, you still need to protect yourself as a buyer. A survey can help highlight structural or other concerns that may affect your decision and future costs.

Home improvements

If you plan to make changes or improvements, you’ll typically need to seek approval before proceeding.

This matters because improvements can increase the property’s value, which may affect the equity loan repayment position.

What happens later (for example, if circumstances change)

Life events can affect homeownership. While the detailed outcomes depend on the situation and scheme rules, it’s helpful to understand that:

• the mortgage and equity loan arrangements may be transferable in certain circumstances
• otherwise, the property may need to be sold to repay the equity loan

Homebuy vs other routes into homeownership

Homebuy is one option within the wider landscape of shared ownership and other government-backed schemes. The right choice depends on factors such as:

• how much you can afford for a mortgage and ongoing payments
• the type of property you want (including leasehold considerations)
• whether you want to build equity through ownership from day one, or through a staged approach

If you’re comparing options, it can be useful to consider how each scheme affects your deposit requirements, monthly costs, and long-term repayment position.

Note: Scheme rules and details can vary by local authority and housing association. The housing association involved in your application is the best source of confirmation for the specific property and eligibility requirements in your area.