Welsh housing minister Carl Sargeant said the scheme will be available to aspiring homeowners with small deposits from 2 January 2014.

The move follows the launch of the Help to Buy equity loan schemes across England in April and Scotland in September.

The Help to Buy mortgage guarantee scheme has been available across the UK since its launch in October.

The Welsh scheme will be open to borrowers with a 5% deposit with the Welsh government contributing a loan of between 10% to 20% of the purchase price. The scheme will apply to new build homes only and the property must be a buyer’s sole residence.

The equity loan element of the mortgage will be interest-free for the first five years before being charged at 1.75% each subsequent year, increasing in line with the retail price index.

Although the scheme is similar to its English equivalent it does differ in several ways.

The property value can be no more than £300,000, compared to £600,000 for the English scheme, while solicitors will be more involved in the process to reduce the burden on builders.

Sargeant said the launch of the scheme would help bring confidence back to the struggling Welsh housing market.

“There’s no doubt that the recession and a tightening of mortgage lending have made getting onto the property ladder much tougher in recent years,” he said.

“Buyers without a large deposit are increasingly finding that home ownership is not an option. “The financial crisis has led to a dramatic fall in house building activity as builders scale back their plans in line with buyer demand.

“To limit scope for confusion, the scheme in Wales matches the UK government scheme quite closely but it has the added benefit of being easier for small home builders to access.

“I therefore urge all builders, large and small, to register now so that they are ready for the first loans being made available to buyers in January.”