Jasmine Birtles
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Do you qualify for a Help to Buy ISA?
Reading Time: 4 minutesIf you’re a first-time property buyer saving up for a deposit to buy a house, you then should open a Help to Buy ISA pronto. This is because this Government initiative is set to end on 30 November 2019, which leaves less than two months to open one.
Take a look at our guide to everything you need to know about Help to Buy ISAs below.
What is a Help to Buy ISA?
The Help to Buy scheme officially launched in 2013 and has helped countless first-time buyers get their feet onto the property ladder.
As part of this scheme, if you’re a first-time buyer, the Government will give you a cash boost towards buying your first home, if you save into a Help to Buy ISA. It’s important to remember that these ISAs are available to every first-time buyer, and not every household. For example, if you are planning on buying property with a partner, then you are entitled to a bonus per person (providing you each have an ISA)
Every month, savvy savers can put away a maximum of £200. On top of this figure, the Government adds 25%. Therefore, if you save £200 per month, you will receive a £50 bonus from the Government.
Just remember though, you can only open one Help to Buy ISA, so you can’t open a new one every financial year. Further, you can’t open a Help to Buy ISA and a normal Cash ISA in the same tax year.
How do they work?
First-time buyers who save in one of these ISAs will have their savings boosted with a payment from the Government when they decide to buy a property.
So for every £1 you save, the Government will give you 25p, for every £200 you save, the government will give you £50 – that’s 25% of your savings. The minimum government bonus offered is £400, which means you need to save £1,600 in order to access this bonus. The maximum bonus that can be received, however, is £3,000. In order to receive this, you will need to have saved £12,000 into your ISA. Further, you can use a Help to Buy ISA with any mortgage; you’re not restricted to a Help to Buy mortgage.
Can everyone apply?
Unfortunately, not everyone can qualify. These ISAs are only for people (or groups of people) buying their first home, so if you already own a property this ISA isn’t for you.
See below for the full criteria.
You do qualify if you…
- Are a first-time buyer
- Have a national insurance number
- Are aged 16 or over
- Want to use it to buy any home worth under £250,000 (or under £450,000 in London)
- Are a resident in the UK for tax purposes.
You do not qualify if you…
- Are going to rent out the property
- Want to buy an overseas property
- Are already a homeowner
- Already have Help to Buy ISA.
How to apply for a Help to Buy ISA
You can open a Help to Buy ISA from a range of banks, building societies or credit unions, and the process is very simple. Read the small print carefully when choosing the account as each one comes with its own interest rate. However, these rates can fluctuate.
To open an account, simply phone, apply online or pop into a branch of a bank account that offers a Help to Buy ISA. You can open one with just £1, so there is really nothing to lose. In the first month, you can save an additional £1,000.
If you choose to withdraw your money at any point, which you can at any time, you can’t put the money you have withdrawn straight back into the account. For example, if you put £200 into an account and then withdraw £50 in the same month, you can’t put the £50 back in the same month. Instead, you need to wait until the next calendar month before making your next deposit.
Don’t forget, if you’re planning to open one a Help to Buy ISA this year, don’t open a new Cash ISA – you won’t be allowed to have both in the same financial year. If you have already opened a cash ISA this year, then you will have missed the boat on the Help to Buy Scheme. However, you can also apply for a Lifetime ISA in the following year.
Useful articles
- Saving: cash ISAs – how to choose the best
- ISA transfer guide
- Make or save £500 a month for your cash ISA
- Stocks and shares ISAs: how to pick the best
Useful article on help to buy ISA’s.
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