First-time buyers now have just five months left to open a Help to Buy ISA. Find out how you can open an account and boost your savings before the deadline.
Applications for the Help to Buy ISA are set to close on 30 November. We take a look at how the Help to Buy scheme works and how you can apply before the deadline.
What is a Help to Buy ISA?
Help to Buy ISAs are savings accounts designed to help first-time buyers save for a house. To encourage people to step onto the property ladder, the government contributes up to 25% of what you pay in. Here’s how they work:
- You can pay in up to £1,200 when you first open the account. Then, you can add a maximum of £200 each month after this
- The maximum government bonus is £3,000 – you’ll need to save £12,000 to reach this benefit
- The minimum bonus you can receive is £400 – you’ll need to save a minimum of £1,600 to receive this
Plus, the house you buy will need to be on the market for less than £250,000 or, if it’s in London, below £450,000. You’ll also need to purchase the house with a mortgage and it should be the only home you’ll own.
If you’re buying a house with somebody who’s also a first-time buyer, you can both apply for a Help to Buy ISA and raise up to an extra £6,000 between you to go towards your saving pot.
Can I still apply for a Help to Buy ISA?
The scheme is due to end on 30 November, but you can apply right up until the deadline. If you already have a Help to Buy ISA, nothing will change – you can continue paying into your account and still receive the bonuses.
Is a Help to Buy ISA right for me?
If you’re planning to buy a house at some point in the future, the Help to Buy ISA is a good option to boost your savings. It’s worth bearing in mind, though, that it’s difficult to withdraw the money until you come to actually buy a house – so if you wanted to make regular withdrawals, it might not be right for you.
Nearly every first-time buyer is eligible for a Help to Buy ISA. To apply for one, you’ll need to:
- be 16 or over
- have a valid National Insurance number
- be a UK resident
- be a first-time buyer, and not own a home anywhere else
It also helps if you haven’t opened another cash ISA in the same tax year. If you have and you’ve paid into it since 5 April, you’ll need to transfer up to £1,200 of your cash into the new Help to Buy ISA. If there’s any remaining money left, you’ll need to move this into a different account.
Where can I find a Help to Buy ISA?
You can apply for a Help to Buy ISA at many high-street banks, either online, by phone or by popping into a local branch. Take a look at the total list of providers who offer a Help to Buy ISA here.
Is there another alternative to the Help to Buy?
If you’re not ready to apply for a Help to Buy ISA before the deadline, you might be wondering if there’s another option which could help boost your savings.
Launched in 2017, the Lifetime ISA could be a good alternative for first-time buyers and people looking to save for retirement. First-time buyers can save up to £4,000 every year and the government will add up to a 25% bonus (up to £1,000).
The money saved can go towards any aspect of buying a home, including the exchange deposit – unlike the Help to Buy scheme.
A first-time buyer savings account
Some banks and building societies offer their own savings accounts for first-time buyers. While they don’t offer the government contribution of 25%, some offer higher growth with rates up to around 5%.
Disclaimer: All information and links are correct at the time of publishing.