What is a Help to Buy ISA?

A Help to Buy ISA is a savings account designed to help first time buyers get on the property ladder. It allows first time buyers who are over 16 to save for a house with a 25% government bonus on top of their savings.

Key Facts

  • It’s only available to first-time buyers aged 16 and over
  • You can make a deposit of £1,000 when you open an account as well as £200 for the 1st month. 
  • There’s no minimum monthly deposit  but the maximum amount you can put into the account per month is £200
  • To get the bonus you need to have saved a minimum of £1,600. The maximum government bonus you can receive is £3,000 (If you have saved £12,000, making your total £15,000)
  • The Government bonus will only be paid when you buy a property.
  • You will earn interest on your savings in the account so make sure to shop around for the best rates. If you are buying a house with someone else, you are both allowed to use the money from your Help to Buy ISAs. 

Is it worth opening a Help to Buy ISA?

A help to buy ISA may not be suited for you if you are looking to become a homeowner ASAP. This is because when you initially open the account you can only put in £1000 deposit. After this, you can add no more than £200 per month. This means that it would take you just under 5 years to save the £12,000 needed to receive the maximum government bonus of £3000.

The Government bonus is also only available if the property that you will buy will be under £250,000 or £450,000 in London. However, if the property is over this threshold the money that is in your ISA will still be tax free and able for you to use, you just will not receive the bonus.

How to open a Help to Buy ISA

If you are wanting to open a Help to Buy ISA, you need to be quick! You can open help to buy ISA with just £1 before it before it ends. Make sure you shop around for the best deal and then contact the bank/building society to get set up. Money.co.uk have a helpful table which compares the options available when looking to open your ISA.

 

Happy Saving!