Help to Buy ISA boosts your savings by 25%
Have you heard about the new Help to Buy ISA but not opened one yet?
Designed to boost your savings, the Government will add 25% to whatever you save; on a maximum of £12,000. For example if you save £200 a month, the Government will give you an additional £50 each month. This means if you save £5,000, the government will top you up to £6,125. Save £10,000 and you'll get topped up to £12,500.
The Help to Buy ISA launched on the 1st December 2015 and runs until 1st December 2019: it will be available from a selection of high street lenders including Barclays, Lloyds, Nationwide, NatWest, Santander and Virgin Money.
The minimum amount of savings you'll receive a bonus on is £1,600, your bonus would be £400 and the maximum is £12,000, where your bonus would be £3,000.
The Help to Buy ISA is an individual product, like any other ISA, so if you're saving a deposit with a partner you can both save in to a Help to Buy ISA; this way your maximum joint bonus would be £6,000.
In the first month you can kick-start your savings by putting up to £1,200 into the ISA, after which the maximum monthly contribution is £200. You can miss making a contribution in any months that you can't do it but you won't be able to make up for it the following month, i.e. if you don't save in May, you can't save £400 in June, just the £200.
You can use the Help to Buy ISA bonus to buy any property, as long as you buy with a mortgage (not buy-to-let). It doesn't have to be a Help to Buy mortgage, although you can use it alongside the Help to Buy Equity Loan, Mortgage Guarantee and Shared Ownership Schemes.
When you're ready to buy a property you close down your ISA and either transfer the funds to another bank account (or your solicitors), you'll then receive a letter from the bank which you'll give to your solicitor and they'll apply for the ISA bonus for you and it'll be added to your other deposit money. Your solicitor can charge up to £50 + vat to do this for you.
If you decide not to buy a property or want to buy one over the £250,000 limit you can still withdraw your money, but you won't receive the Government bonus.
To be eligible for the Help to Buy ISA you must:
be 16 or over
have a valid National Insurance number
be a UK resident
be a first time buyer, and not own a property anywhere in the world, or have a legal interest in any property
not have another active cash ISA in the same tax year
You are able to continue to save money into a stocks and shares ISA, if you open a Help to Buy ISA
For properties to qualify for the government bonus they must:
be in the UK
cost up to £250,000 (or £450,000 if buying in London)
be purchased with a mortgage
not be a second home or a buy-to-let property
not be rented out after you buy it
For more information about the Help to Buy ISA and to see whether you're eligible please click the link below.