help to buy isa

Everything You Need To Know About The Help to Buy ISA

07/01/16

 

In December 2015, the government launched a new scheme that could help first-time buyers secure their first property. The “Help To Buy ISA” is a newly introduced savings account where for every £200 you transfer into that account, the government will add £50. It subsequently means that if you were to do this every month, by the end of 2016, you could have received £600.

What are the important facts I should know?

  • The maximum amount the government will add to your ISA savings account is £3,000. This money will go an awful long way for first time buyers who may have previously struggled to save for a property. 
  • You can only use the savings account to buy a property that is under £250,000 or less in the UK. If you want to buy in London, you can look for homes valued up to £450,000. 
  • When you begin your ISA account, a deposit of up to £1,200 is required to receive the 25% bonus yet from the government will start straight away. 
  • You have to be over 16 years of age to qualify for the ISA account. Also, you must be someone who is saving to buy their first home.
  • You can not use an ISA account to purchase a property to rent out to tenants or to buy somewhere outside of the UK.

What are the pros?

  • The “Help to Buy ISA” is an amazing way to save money while getting assistance from the government.
  • It means people who have only been able to rent now have the option to save money and buy their first home.
  • If you and a friend, family member or partner want to apply for a “Help to Buy ISA” you can both have your separate individual accounts. Thankfully, it means this is a quicker way to save money for the ideal first home you want to buy together.
  • You could split your Help to Buy ISA with a Cash ISA if it’s more convenient for you. It’s also a good idea to double check with providers offer this to first-time buyers.
  • If you apply for this ISA, you do not need to need to request a mortgage with the same supplier. You have the freedom to find the best one that suits you.
  • You will only have to claim your bonus by 1st December 2030, which means you’ll have plenty of time to use this saving account.

What are the cons?

  • It might be tricky for people who aren’t sure about what area they want to live in as a resident. If you’re someone who might relocate abroad in the next year or so, this ISA isn’t going to be suited to you, since it’s strictly for homes within the UK.
  • Even though you can split your Cash ISA with the help to buy ISA, you can’t apply for both in the same tax year. You must already have a cash ISA to be able to do this. Also, it’s important to note that not all providers offer this to their customers.
  • You can’t put away more than £200 per month, and this might not be a great deal for people who want to save up larger amounts of money.
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