Deposits made easy with a Help to Buy ISA

24 July 2018

If you or your children are looking to get on the property ladder in the next few years, then a ‘Help to Buy ISA’ could be the perfect starting point.

Help to Buy ISAs allow you to earn a tax-free rate of interest (at the time of writing the best rate was 2.53% offered by Barclays) BUT, and here’s the key point… the government will add an extra 25% to the total sum saved when you are ready to use the money to buy your first home! You can start saving at 16 years of age and if you save the maximum amount of £12,000 the government will add a whopping £3,000.

Your solicitor will have to apply for the 25% bonus on your behalf and the bonus is only added to the ISA balance at the completion of your purchase. This is to ensure the bonus is only used for the deposit on the property and the bonus is not released if the purchase does not proceed.

The product, as the name suggests, is for individuals. If you buy a house with someone else and you both have Help to Buy ISAs then you can use them both, getting double the bonus!

The ISA and Government bonus can be used to buy any property costing under £250k (£450K in London). Importantly, the scheme is not limited to new builds, as long as you are using a mortgage to purchase the property, you can buy any type of property. However, you cannot use the deposit to buy a buy-to-let property.

The mortgage you take does not have to be with the same provider as your ISA allowing you to shop about for the best deal on your mortgage too, saving you even more money. Our Best Buy Table will give you an idea of the deals available currently.

If you decide that homeownership isn’t for you after all or you can find a good use for the money you’ve saved elsewhere then you can get your money anytime. You’ll still have benefitted from tax-free savings, but you will not be eligible for the bonus as this can only be used to purchase a property.

So, what’s the catch? Well, nothing! You can get a great rate tax-free on your savings, a 25% bonus from the government and if you decide you’d like to spend your money on something else it’s yours for the taking.

To find out more about Help to Buy ISAs and the Help to Buy scheme check out helptobuy.gov.uk or check out our Help to Buy Guide

Or call one of our friendly advisers on 0203 745 5893 who will be delighted to assist you.