In his recent Budget, Chancellor George Osborne announced an expansion to the Government’s Help to Buy Scheme with the introduction of the Help to Buy ISA.
Designed to help first time buyers save for their deposit, the Help to Buy ISA gives people the opportunity to access up to £3,000 of Government funds towards their first home, giving their savings a much-needed boost.
But how will it work?
- The Government will contribute £50 for every £200 saved – that’s 25% of the amount you save.
- You can save no more than £200 per month, although there is no minimum monthly deposit.
- You can make an initial £1,000 deposit when you open the account in addition to making monthly savings, so if you’ve already started saving you can still take advantage.
- Once savers are ready to purchase their first home, they withdraw their savings and receive their Government bonus equating to 25% of the total balance.
- This bonus is capped at £3,000 so there will be no bonus awarded on any savings of more than £12,000.
- The minimum bonus is £400.
- The bonus will be paid in the form of a voucher which will be sent directly to your mortgage lender.
What are the rules regarding the homes that can be bought with the Help to Buy ISA?
- The bonus can only be used towards a first home in the UK.
- The home should have a purchase value up to £450,000 in London and up to £250,000 in the rest of the UK.
- The Help to Buy ISA can be used to save towards both new builds and already occupied houses.
Is there anything else first time buyers need to know?
- The accounts are per person rather than per home, so couples or friends buying together can each receive a bonus. So a couple each saving £200 per month to a total of £12,000 each will each receive a £3,000 bonus – a total deposit of £30,000.
- Accounts will be available to first time buyers aged 16 and over, and new accounts will be available to the public for 4 years after they launch in autumn 2015 – but there’s no limit on how long you can save for once you’ve opened an account.
- You can’t save money in a cash ISA and a Help to Buy ISA in the same tax year. So if you open a new cash ISA – or even put money into an existing one – after 6 April 2015, you cannot open a Help to Buy ISA when they launch later in 2015, but will need to wait until the following tax year begins in April 2016.
- Help to Buy ISAs will be available through banks and buildings societies which will each set their own interest rates as they do with regular cash ISAs. This means savers will earn interest on their savings as well as getting their bonus.
- Savers will not be restricted to using the Government’s Help to Buy mortgages, but can apply for any residential mortgage deal they like.
When you come to buying your first home, or if you are ready to buy now, Forbes Solicitors have a full-service expert conveyancing team who use the latest software to make completing on your home as quick and easy as possible, all complete with the personal touch that many conveyancing services lack.
If you would like to take advantage of Forbes Solicitors’ vast experience, fantastic reputation and excellent fixed price conveyancing service, call us today on 0800 037 4628.
https://www.forbessolicitors.co.uk/
