What is a Help to Buy: ISA?
The Government has introduced a new form of ISA called the Help to Buy: ISA to help first-time buyers to save a deposit for their first property. It has all the tax advantages of a cash ISA but is also topped up by the Government by up to an additional £3,000.
The Help to Buy: ISA is available from a number of banks and building societies. First-time buyers that save through a Help to Buy: ISA receive a government bonus to help encourage them to save.
How does it work?
The saver opens up a Help to Buy: ISA at a bank or building society. You will need to be over 16, have your National Insurance No. and be a first-time buyer. You can only open one Help to Buy: ISA and the saver can save a maximum of £200 per month into the Help to Buy: ISA. The government will increase this by 25% when the saver buys their first house.
You can deposit a lump sum of up to £1,000 into the account as you open the account. The maximum amount that can be saved under the Help to Buy: ISA is £12,000. The government will top this up by 25% of the amount saved, to a maximum of £3,000 to bring the total saved to £15,000.
The bonus is paid when the saver commits to buying a property as their main residence (not buy to let). The bonus is subject to a minimum claim of £400 (requiring a minimum of £1,600 of savings).
The amount saved can help pay the deposit on a house up to the value of £250k outside London and £450k in London.
Help to Buy: ISA accounts are limited to one per person not one per household, so a couple could put two Help to Buy: ISAs together to buy a home.
Once an account is opened there is no limit on how long a person can save into a Help to Buy: ISA and no time limit on when they can use their government bonus.
*For further information see https://www.gov.uk/government/publications/help-to-buy-isa
Contains public sector information licensed under the Open Government Licence v3.0.