The Help To Buy ISA: How Can It Help Me?
21 April 2016
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For first-time buyers, the Help to Buy ISA is a great way to save for that all-important deposit, as it could see the government topping up your savings by up to £3,000! Not sure how it can help you or how to get started? Here’s all you need to know:
How does it work?
In a nutshell; for every £200 you save, the government will add £50. For those that save between £1,600 and £12,000, your ISA will be topped up by 25% and funds standing at £12,000 and above, will be given the maximum £3,000 bonus.
Potentially, this could see couples, or those buying their first home together, benefit by up to £6,000, as the Help to Buy ISA is granted to each individual buyer. This makes getting your hands on the deposit you need even easier!
The Help to Buy ISA can then be used to help you buy a property worth up to £250,000 (or £450,000 in the inner and outer London Boroughs).
What do I need to do?
The Help to Buy ISA is available to all UK residents, aged 16 and above, who are first-time buyers (i.e. do not own a property elsewhere or plan to rent their new home out) and are buying a home with a mortgage.
Those applying for the ISA shouldn’t have another active cash ISA, within that tax year so before you open your account, speak to your bank about the best way to organise your finances.
To start with, simply open a Help To Buy ISA. Many banks and building societies now offer them, just shop around to find the best deal for you! You can kick-start your first month of saving by making deposits up to a total of £1,200.
Then, add a maximum of £200 per month. This doesn’t need to be every single month, but just be aware that you can’t ‘catch up’ on months. For example, if you don’t put money away during January and February, this doesn’t mean you’re allowed to save £600 during March.
Once £1,600 has been saved, a £400 bonus will have been earned. The savings continue at 25%, until savings reach the maximum £12,000, when a £3,000 bonus can be applied.
It’s good to remember that you won’t receive the government bonuses until you are ready to buy your first home. Your solicitor or conveyancer will apply for and obtain your bonus, adding it to the deposit you are putting into your new home!
Looking for first home inspiration? Check out homes for sale with Pittis.
The information provided is based on our understanding of current law and HM Revenue & Customs practice, which may change. Your chosen provider will be able to provide further details.