What is the new Help-to-Buy ISA and could it help you get on the housing ladder?
At this week’s Budget, the big news for anyone hoping to buy a house for the first time was the announcement of a Help-to-Buy ISA. So what is it? We asked the Money Advice Service to break it down.
What is it?
In many ways, the Help-to-Buy ISA will be like any other ISA as you can earn tax-free interest on any money you save there.
The big difference is that the government will also give you a 25% bonus when you buy a house. This bonus is capped at £3,000, which means you’d need to save £12,000 to get the max amount.
How much can you save?
The initial deposit is capped at £1,000. Then you can pay in a maximum of £200 a month. That means the quickest you’d be able to get to the magic £12,000 is four and a half years – though you can claim the bonus on a balance of £1,600, gaining you an extra £400.
There’s a cap on the value of properties you can use the ISA for. In London they can’t cost more than £450,000. Elsewhere it’s a max of £250,000.
Who’s it for?
It’s only for first-time buyers in the UK and you can only ever have one in your lifetime, although it’s not limited to one ISA per property. That means more than one person can combine their Buy-to-Let ISAs and bonuses when buying together.
You’ll also have to be over 16 years old.
When do they start?
These new ISAs will be available from the Autumn this year, and they should be around for new customers for four years.
All information accurate at time of publication.
This article is provided by the Money Advice Service.