The facts: the Help to Buy ISA
This month, the government has launched a Help to Buy ISA, which is great news for first time buyers. Here’s what you need to know:
Why has it launched?
The Help to Buy ISA is designed to It’s to help First Time Buyers get on the property ladder by allowing them to save up their deposit quicker with a percentage being contributed by the government.
How does it work?
You open up your Help To Buy ISA and for every £200 you save in it, the government will contribute £50.
Savers can kickstart their account by paying a maximum of £1,200 in their first month of opening the account and then after that, there’s a maximum of £200 a month allowed to be paid in.
The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus. The maximum amount the government will pay in is £3,000 but a couple can open individual accounts, meaning they could potentially claim £6,000 together from the government.
It’s important to note that savers are prevented from opening other Isa accounts but may continue to hold existing ISAs.
For the bonus to be claimed, a house must be purchased by the 1st December 2030. The bonus is handed by the solicitor or conveyancer who applies for the money and if the purchase falls through, the bonus is paid back.
Who can take part?
UK residents over 16 looking to buy a property in the UK for the first time are eligible and the house must not be for the buy-to-let market.
The house you’re buying can cost up to £250,000, or up to £450,000 if you are buying in London.
The savings account is only available for those looking to build up enough cash for a house deposit and the scheme is closed to new entrants from 30th November 2019. The house must be purchased with a mortgage.