Help to Buy ISA
The Help to Buy ISA is a new type of ISA specifically designed to help first-time buyers save up for their new home.
The ISA was announced in the Chancellor’s Budget in March 2015, and is available to both couples and singles looking to save their 5% deposit.
How does it work?
With the Help to Buy ISA, the Government will contribute towards the cost of buying your first home as you save money. That means that whatever you can pay into your account each month, the Government will top it up with an extra 25%. If you manage to save the maximum amount of £200, the government will be topping up your account with £50 each month.
The Government bonus has a cap of £3,000 on £12,000 of savings. The minimum you need to have saved to get the bonus is £1,600 (so a £400 bonus).
You can also save an additional £1,000 when you first open your Help to Buy ISA account, meaning you can save £1,200 in the first month, and have it topped up with £300.
Help to Buy ISA availability
The Help to Buy ISA is available through banks and building societies, and works the same as a regular cash ISA. This means you can build up tax-free savings, and earn interest as well as getting the bonus at the end.
The government bonus can only be put towards a first home located in the UK, with a purchase value of less than £450,000 or less in London and £250,000 or less in all other parts of the UK.