Help to Buy ISA Scheme
If you are a first time buyer, you may be saving for a mortgage deposit with the help of the government through the Help to Buy ISA scheme. Applications for new accounts closed on 30 November 2019, so you can no longer apply for a new Help to Buy ISA, but if you already have an account before this time, they are still valid.
The scheme is designed to make it more affordable for first time buyers and assist home ownership by offering an ISA with tax free interest and a government bonus of 25% on your savings.
How a Help to Buy ISA works
In the first month you can contribute an initial £1,200 into your ISA and, for every £200 you save, the government will give you a tax-free bonus of £50 to be used for your house deposit.
There is an ISA savings limit which means that over the lifetime of your ISA you can earn a maximum government bonus of £3,000 on a closing balance of £12,000 including interest. The minimum bonus is £400 meaning your balance would need to minimum £1600 on closing.
Help to Buy ISAs are available to each first time buyer, not each household, so if you are buying a property with your partner you have the potential to add a further £6,000 to your deposit from combined savings of £24,000.
How long are Help to Buy ISAs available?
Bonuses can be earned until 1 December 2030 as long as a minimum deposit of £400 is made. If you manage to save more money, interest can still be earned on additional savings.
There is no transfer limit and lenders provide their own interest rates giving you the freedom to compare different providers. Transferring ISA accounts is permitted so, if the rate drops with your current provider, you can find a new Help to Buy ISA that pays a better rate.
You can find a range of banks and building societies who are involved with the scheme at the Help to Buy website: www.helptobuy/help-to-buy-isa/providers-in-the-scheme.
Help to Buy ISA eligibility
To open a Help to Buy ISA you must meet certain eligibility criteria. To qualify for the scheme and the bonus you must:
- Purchase a Residential Property with a mortgage, in the UK, with a value up to £250,000 or £450,000 in London;
- Be a first buyer aged 16 or over, have a valid National Insurance number and be a resident in the UK.
- Not have an existing Cash ISA as two Cash ISAs cannot be funded in the same tax year. If you have an existing ISA, which was opened this tax year, you can still open a Help to Buy ISA but you will need to take additional steps. These are listed on the government website: www.gov.uk.
Help to Buy ISA Advice
Jackson Lees Solicitors can help you when you are taking your first steps into Home Ownership.
We have successfully applied for a number of Government bonuses even though the scheme has been running for a relatively short time.
As registered members of the scheme, we are already set up to make these applications. This means that we can help you obtain your funds and arrange for your bonus to be used for your mortgage deposit once you are ready to buy your first home.
If you would like to discuss the purchase of your first home with a solicitor, please fill in our enquiry form or call our residential property team.