Getting on to the property ladder is a dream held by many, and one government scheme which is worth exploring if you’re a first time buyer is the Help to Buy ISA.
The idea behind the Help to Buy ISA is to help you save for the deposit you need to get a mortgage. It is open only to first-time buyers – you cannot have owned a property anywhere else in the world.
As with all ISAs, the savings are tax free but the bonus is that the government also makes a contribution – so you save faster.
You put money into the ISA, and when you come to buy your property the government will top up the contributions by 25%, up to a certain limit So, for every £200 you save, the government will contribute £50. You can start off your ISA with an initial deposit of up to £1,000 which also qualifies for the 25% boost from the government.
Help to Buy ISAs are available to each first-time buyer, not each home. So, if you’re buying a property with your partner, for example, you’ll each be able to get a 25% bonus on your savings which can help towards your deposit.
If you are a first-time buyer, instruct your solicitor or conveyancer – such as the legal team here at Optimum. We will apply for your government bonus prior to exchange and completion – you can’t apply for it yourself.
The government sets out strict guidelines for conveyancers when requesting the bonus, and certain steps have to be taken in order to ensure the bonus is received in time for completion. Once we receive the government bonus, it will be added to the money you’re putting towards your first home.
To qualify for a Help to Buy ISA you must:
You can use the Help to Buy ISA with any mortgage but you can’t use it if you’re planning to rent out the property, or use it to buy a property abroad..
You will earn interest on the money you are saving – and that rate of interest will vary according to which provider you use – but you do not earn interest on the government bonus, because this does not come through until you have closed the account prior to completion.
If you are a first-time buyer, and would like some help with conveyancing, or a little more information about the property-buying process, please get in touch with the team here at Optimum Professional Services.