First-time buyers have been notoriously up against it in recent times and despite properties having seen a dip in value recently, they’re now back on track and seeing continual increases. This new scheme will be targeted at easing the situation that first-time buyers find themselves in and will ultimately offer such people up to £3,000 tax free.
This cash boost will, however, be according to how much the person has in savings and as such will be equal to 25% of the cash that they’ve in a Help to Buy ISA. This then equates to a £50 boost for each and every £200 saved up to the value of £15,000.
This bonus will be applicable to each and every first-time buyer, rather than per house, which then means that a couple can receive up to £6,000 for their joint purchase.
In addition to the government’s bonus the ISA will also pay interest.
Who will be able to apply for the Help to Buy ISA?
Anyone who is aged 16 years and above will be able to apply for this ISA, although applicants can’t already own their own house. Furthermore it cannot be used to fund a buy-to-let property, even where the applicant may not own another home.
How much can applicants save?
Given that the minimum Government contribution towards the ISA is £400 applicants will need to have saved at least £1,600. When applicants initially open the account they will be able to deposit up to £1,000, and thereafter they can then pay in £200 per month.
This then means that in order to receive the maximum £3,000 boost the saver be saving £200 per month with an initial £1,000 deposit for a little over four and a half years.
Where can I get a Help to Buy ISA?
The Help to Buy ISA will be available through banks and building societies and rates will be set by them and differ just as with normal cash ISAs. This means you will earn interest like a normal cash ISA as well as getting the bonus at the end.
Barclays, Lloyds Banking Group, Nationwide, NatWest, Santander and Virgin Money have confirmed they will offer the savings product.
WARNING: You can’t contribute to a cash ISA and a Help to Buy ISA in the same tax year. This means that if you open a new cash ISA after 6 April 2015 (or put money in an existing one, which technically is opening a new one) you will NOT be able to open a Help to Buy ISA when they launch in December – instead you’ll have to wait until the next tax year (April 2016).Back to all articles