New help to buy ISA scheme

  • Help to Buy Isa's available today
  • Government tops them up by 25%
  • Topped up when you buy your first home

Michael Godsmark,

December 1, 2015

Help to buy ISA’s are a great new way to save your money. They’re tax free which means 100% of any growth or income on your ISA money stays with you.

From today, first-time house savers can benefit from the government-funded Help to Buy ISAs. If you’re interested, check the restrictions around saving into existing ISAs in this tax year.

We think they are particularly effective for family members and friends of younger adults, who want to contribute to their first house. It’s effectively a 25% increase in your deposit!

How it works?

Over 5 years, if you save £200 per month, the government will top up your total of £12,000 with £3,000. This is the maximum value you can receive, but below this the government will top up your savings by 25%, ready for when you’re buying your first home. Think of it like this, for every £200 you save you gain a £50 top up, tax free.

You receive the top up as a voucher when you come to buy your property. You also receive interest on the balance as it increases.

Who are they for?

You must be a first time buyer (ie, never owned a home before) & be over 16 years old.

How many can I have?

You can only have one at once. However you can, and should, switch from over the years if interest rates increase at other banks.

Are there any catches?

You can’t pay in more than the £2,400 per year.

You can’t contribute in a cash ISA and a Help to Buy ISA in the same tax year.

This means that if you opened 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 this tax year – instead you’ll have to wait until the next one.

So far so good?

As we said earlier, we think this is a great scheme to help get first time buyers get on the property ladder and particularly useful to families of first time buyers who may want to help contribute to their first home. The ISA would need to be in the buyers name so some trust would be needed to ensure it’s used as intended.

Where can I get one?

The Help to Buy ISAs will be available through banks and building societies and rates will be set by them and differ just as with regular cash ISAs.

 

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About The Author

Michael is an enthusiastic and cheerful individual who, when not hard at work, enjoys mountain biking, cooking curry and travelling to new places.

   @MichaelWDVLL

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