Help to Buy ISA

27th November 2015


If you are a first time buyer you can save up to £200 per month towards your first home with a Help to Buy ISA and the government will boost your savings by 25% (£50 for every £200).

You need to have at least £1,600 saved to get the bonus (so you’d get £400 extra) the most bonus you can receive would be on £12,000 (so a £3,000 bonus) if you have more than that you can still use your ISA to save you just won’t get more than £3,000 on top.

Even for those who are soon to be purchasing and have already saved, it only takes 3 months to achieve a bonus of £400. (£1000 deposit + £200 contribution your 1st month then 2 monthly contributions of £200). It would take 4 years 7 months to achieve your full £12,000 savings and £3,000 bonus.

You are only able to use the savings towards the deposit of the house and not on the fees. Once you then close your account your solicitor or conveyancer would apply for your bonus. They can charge a maximum fee of £60 (£50+ VAT) to process your payment.

Pros:

  • •Tax free savings.
  • • Government will boost your savings by 25%.
  • • As it is an Individual Savings Account if you and your partner are looking to purchase your first home you are both able to open a Help to Buy ISA (must be 16+ years of age).
  • • You can make an initial deposit of £1,000 to reach the full amount quicker.
  • • No minimum monthly deposit required.
  • • There is no time limit on your Help to Buy ISA account (but they are going to stop offering them in 2019).
  • • The property may be old or new, house or flat up to £250,000 outside London £450,000 in London.
  • • You can withdraw your money at any time but will not receive your government bonus.
  • • You can transfer you account between provider to get the best interest rate.
  • Cons:

  • • Due to the maximum savings of £200 per month it will make amassing that deposit a slow process.
  • • Those making the most use of the bonus will assumingly be the people who can already afford a deposit, meaning that house prices could potentially be driven up.
  • • It will slow down the housing market by encouraging first time buyers to delay purchasing until they’ve made the maximum use of the government bonus.
  • As of today only 14 companies have committed to offering the Help to Buy ISA’s none of which have released any products or rates.

    List of providers are: HSBC, Aldermore, Clydesdale Bank, Newcastle Building Society, Barclays, Bank of Scotland, Halifax, Lloyds, Nationwide, NatWest, Santander, Ulster Bank, Virgin Money and Yorkshire Bank.

    They haven’t confirmed if you can have a cash ISA as well as a Help to Buy ISA. If you are limited to saving £200 per month you aren’t making use of your full ISA allowance (£15,240 per tax year).

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