Help to Buy ISA: What is it and when is the deadline to get one?


If you’re a first-time buyer or think you may be within the next 10 years, you may benefit from the Help to Buy ISA. However, you might want to act quick as the deadline to open an account is less than 2 months away, on the 30th of November 2019.

Money saving expert, Martin Lewis, is urging anyone over the age of 16, who hasn’t owned a home yet to look into opening an account, as it could make a huge difference to your savings when trying to get onto the property ladder.

What is a Help to Buy ISA?

 A Help to Buy ISA is a way for first time buyers to save more money for when they buy their first home. You can save up to £1,200 in your first month, then up to £200 per month after that.

If you’d like to save less than that each month, that’s fine and you can keep contributing for as long as the scheme exists. Once you are ready to pay your deposit for your first home, the government will boost your Help to Buy ISA savings by 25%, meaning that you will receive an extra £50 for every £200 that you save. The maximum you can receive from the government is £3000.

To receive the government bonus, you will need to have at least £1,600 saved in the account. This could potentially only take 3 months if you save the maximum amount each month.

The scheme is available to UK residents over the age of 16, and you can only apply if you are a first-time buyer.

If you’re not ready to start saving for a house yet but don’t want to miss out on the opportunity of a savings boost, you can open an account with as little as £1 to ensure you are eligible for potentially thousands of pounds worth of government bonuses later on.

Help to Buy ISAs are available from a number of different banks and building societies so it may be worth shopping around.

Is a Help to Buy ISA worth it for me?

As with every lending scheme, there is a chance that it may not be right for you. This is because each person’s circumstances are different.

It’s worth thinking about when you want to buy your first home. You have until 30th November 2029 to continue saving, and you will be eligible for the government bonus as long as you use it by 1st of December 2030. However, as you can only save a maximum of £200 a month, after the first month, it takes almost five years to save the £12,000 that you need to gain the maximum government bonus. So, if your heart is set on being a homeowner in the near future, you may benefit from saving additional amounts in a separate account.

The scheme is also only available for people buying a home with a purchase price of £250,000 or £450,000 in London. This means that, if the property you want to purchase is over that amount, you won’t get the added government bonus of up to £3,000.

If you are struggling to decide on whether or not it is worth it, it may be worth speaking to an Independent Mortgage Adviser who can help advise you.

What if I am purchasing a home with someone else?

If you’re both first-time buyers and each have a Help to Buy ISA, you can consolidate both and use the money towards a property. However, the maximum purchase price won’t change, so you will still only be able to buy a home at either £250,000 or £450,000 in London.

On the other hand, if you are buying with someone who already owns a property, it’s not as straight forward. Luckily, the Help to Buy ISA applies to individuals rather than households, so you can ask your solicitor to request your own government bonus when going through the buying process. The other party will not be able to use the scheme, as they already own a property.

If you’d like more information on the Help to Buy ISA or any other available schemes, get in touch.

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