23rd December 2015
The beginning of December saw the launch of the Government’s new Help to Buy ISA scheme. The Help to Buy ISAs are highly recommended by financial experts for first time buyer’s saving for a mortgage deposit. If you are saving to buy your first home, then the Help to Buy ISA can boost your savings by 25%. For every £200 you save, you will receive a Government bonus of £50. The maximum bonus you can receive is £3,000.
The Help to Buy ISA can be used to purchase properties under government schemes such as shared ownership and Help to Buy, as well as on the open market.
Help to Buy ISAs are available from some banks and building societies, with several offering competitive interest rates. A list of providers in the scheme is available here.
Who is eligible for Help to Buy ISAs?
To qualify for a Help to Buy ISA you must be:
- A UK resident
- Aged over 16
- Be buying or saving for to buy a UK property for the first time
- Not have another active cash ISA in the same tax year
The house you eventually use the Help to Buy ISA toward purchasing must be for the purpose of you living in it, properties bought for the buy-to-let market will not qualify.
The cost of the home must not exceed £250,000 or £450,000 if the property is in London.
How much can you pay into your Help to Buy ISA?
When opening the account, savers have the option of paying in a one off lump sum of £1,000. There is a monthly deposit required of £200. Once the savings amount has reached £12,000, the saver is eligible for the maximum £3,000 bonus. You are not obliged to wait until the saving amount reaches £12,000 to receive a bonus, as a bonus is available after a minimum of three months. So, in effect, you could save £1,600 and receive a bonus of £400.
If you are in a couple, you can both open Help to Buy ISA, meaning your maximum joint bonus could be £6,000.
How do you claim the bonus?
Your solicitor will apply for the bonus when you are in the process of purchasing a home. Should the sale fall through, your solicitor will apply to have the bonus reinstated.
For more information about the Help to Buy ISA visit the official Help to Buy website