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£40m Welsh fund to offer interest-free loans to struggling homeowners
The Welsh government has launched a new £40m scheme that will offer interest-free loans to qualifying homeowners who are struggling to pay their mortgage.
The Help to Stay Wales initiative will mean eligible households that are at “serious risk of losing their home” can partially repay some of their existing mortgage through an equity loan, thereby reducing their monthly repayments.
The loans, secured through a second charge mortgage through the Development Bank of Wales, will be repayment free for the first five years.
It comes as interest rates remain at a 15-year high, leaving homeowners with tracker and standard variable rate mortgages exposed.
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Welsh climate change minister Julie James said: “The current economic climate presents many challenges for homeowners as they face the significant rise in fuel costs, high inflation, escalating rent and house prices with incomes often not keeping pace.
“The aim of the Help to Stay Wales scheme is to help homeowners to continue living in their precious homes.”
The initiative is open to people in homes worth up to £300,000 and with household earnings of no more than £67,000. Successful applicants could borrow up to £147,000.
The scheme could help between 400 to 500 households a year, the Welsh government has said.
Interest is to be charged at 2% above the Bank of England rate after the five-year interest-free period, the BBC reported.
However, opposition parties in Wales have attacked the idea, branding the scheme “flawed”.
Conservative shadow climate change minister Janet Finch-Saunders said: “It is not the role of the Welsh government to hand out loans to pay off people’s mortgages.
“The UK government has already secured a wide range of support directly from mortgage providers to support people.
“The scheme is flawed and raises several questions, including whether it is being targeted correctly and why social landlords are not being supported to invest in homes that are threatened with repossession.”
At the end of last month, the government announced that landlords in Wales will be able to increase rents by a maximum of 6.7% from April next year.
This followed news of a new Welsh Housing Quality Standard, although some in the sector warned that the funding attached to the standard does not match the scheme’s delivery ambitions.
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