Help to Buy ISA: scheme closes to new savers in November

by Iain Mason

Published on 7th November 2019

If you’re a first-time buyer planning to open a Help to Buy ISA to get you on to the property ladder then time is running out.

Help to Buy ISA

You only have until 30 November 2019 to open a Help to Buy ISA. After that date, they will no longer be available to new savers.

However, if you have already opened a Help to Buy ISA – or if you do open one by the end of the month – then don’t worry: you can keep saving into your account until 30 November 2029 when accounts will close to additional contributions.

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.

As with all ISAs, the savings are tax free, but the bonus is that the government also makes a contribution – so you save faster.

How the Help to Buy ISA works

The Help to Buy ISA is available from a range of banks, building societies and credit unions.

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 £1,200 which also qualifies for the 25% boost from the government.

The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy ISA before you can claim your bonus. The maximum government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.

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.

How to apply for the ISA

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:

  • Be a first-time buyer
  • Be aged 16 or over
  • Use it to buy a home worth under £250,000 (or under £450,000 in London). 

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.

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