15th Jun, 2018
We have said before that we think Help to Buy ISA’s are one of the best schemes out there for first time buyers – you can earn a government bonus of up to £3,000, so what’s not to love?
But for some of you this may still be a very alien concept, which is why we have broken it down so you can better understand the ins and outs…
How does it work?
It can be really hard to get onto the property ladder for the first time, and saving for your deposit is the key to getting a foot up. Once you have opened the ISA, you can kick-start your savings by putting in an initial lump sum of £1,200, and then £200 every month onwards – don’t worry if you can’t afford to put in the full amount each time, you can add in anything up to this sum. In return, the government will boost your savings by 25% – and it’s as simple as that!
It is important to remember that if your final savings are below £1,600 you will not qualify for the bonus. The account is also capped at £12,000, meaning the maximum you can earn from it is £3,000.
The Help to Buy ISA is also based on an individual, not a household. This means that if you and your partner are both first-time buyers, you can have an account each – and earn up to £6,000 towards your deposit.
Will the bonus contribute towards buying my home?
Yes! The government bonus will be added to your overall deposit. When calculating your mortgage, your lender will want evidence of the funds you have available, and the bonus will be included when working out your loan amount.
You MUST instruct your solicitor to apply for your government bonus once your offer has been accepted – don’t wait until completion as this will be too late!
Do I qualify to open a Help to Buy ISA?
Who can I open one with?
The national banks and building societies offering them are:
Interest rates will vary, so it’s important to do your research and shop around before selecting where you’d like to open one.
What if something goes wrong when I’m buying a property?
As we have previously stated, your solicitor will apply for your government bonus when your offer on a house has been accepted, and they will then close your account. However, if your home purchase doesn’t go through after you have received your bonus, you can reopen a Help to Buy ISA. You will simply need a ‘purchase failure notification’ letter – which your solicitor will have – and you can show it to a bank and they will open it for you.
In this case, you will be able to deposit the full figure that you have saved – if that is £12,000 you can put this all in at once.
How long are Help to Buy ISA’s available?
They are available until 30 November 2019, which means they will no longer be valid for new savers to open after this date. But if you open one before this date, you can continue to save into your account – but you must claim your bonus by 1 December 2030.
So why not utilise your chance to open a Help to Buy ISA before it’s too late? It could mean that you are able to afford to move out earlier than you had planned!
If you already have the sufficient funds for your property deposit, and are on the lookout for your first home, get in touch with one of our reliable sales team here.
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