Get a cash boost to help buy your first home
The Help to Buy ISA will provide a cash boost to savers, offering a 25% top up from the Government on what you’ve saved. If you are saving for your first home deposit, it will be a great way to give your saving efforts a little extra help.
Here is a round-up of what you need to know:
- If you are buying a property for the first time, then you can open a Help to Buy ISA. You need to open the account between 1st December 2015 and December 2019.
- If you are buying with a partner, you can both take advantage of the scheme as the Help to Buy ISA is for individuals. If you are both first time buyers, then you are both eligible for a Help to Buy ISA, therefore, doubling your bonus.
- You aren’t restricted to buying a specific type of property. The bonus will be paid on the purchase of a home worth up to £250,000 ( £450,000 in London).
- In the first month, you can save £1,200 (especially useful if you’ve already been saving). You can then add up to £200 a month after that.
- The Government will add a 25% tax-free bonus on the balance of your ISA when you are ready to use it for a deposit. You must have saved at least £1,600, on which you’d receive a bonus of £400. The maximum bonus you will get is £3,000, that’s based on savings of £12,000. (If you save more than this you can still use the ISA, you just won’t get a boost of more than £3,000).
- Whilst you can only have one Help to Buy ISA, it is useful to keep an eye on the market as you can transfer it to a new provider to get a better rate.
- You can’t pay into both a Help to Buy ISA and a cash ISA in the same year. But the Help to Buy ISA offers a 25% boost, which is much higher interest rate than a regular cash ISA would likely pay.
- When you come to buy a home, your solicitor will arrange the payment of the bonus from the Government. They will be able to talk you through the full technical details of doing so.
- Because the bonus payment is made on your final balance it is worth considering that if you take money out of the ISA, you will miss out on some of the bonus that you would’ve been due to.
If you want to chat more about getting your first mortgage and buying a property check out the ESPC Ask the Expert service.