On 1st December 2015 the government launched Help to Buy ISA’s for all first time buyers aged 16 years and over. This is an absolute “no brainer” if you are a first time buyer and saving for a mortgage deposit.
Most high street banks and buildings societies are offering these. They are available for properties worth up to £250,000.00 (or £450,000.00 in London). There are no restrictions as with other government schemes, for instance that the property has to be a new build. Provided you are buying with a mortgage and not a cash buyer, this is definitely the way forward.
You can save up to £1,200.00 in the first month of opening and thereafter up to £200.00 per month. The government then add 25% tax-free to whatever sum is in the ISA at the time of using it to purchase your property.
You will need to have saved at least £1,600.00 to enable the bonus to be paid (£400.00). The most you can save is £12,000.00 giving you the full bonus of £3,000.00. This scheme is set to keep running until December 2030.
This is a UK scheme by the Conservative Party not an EU scheme so, whilst a new Conservative government could change their mind, if they did it would likely close to new entrants rather than “pull the plug on those already in the scheme”. Of course, nothing is guaranteed!!
This is an individual savings plan and couples buying together are treated separately, enabling both parties to claim their full bonuses.
If one party already owns a property and decides to sell and buy with a first time buyer, the Help to Buy ISA can still be used by the first time buyer.
The bonus is collected from the government body by the Solicitor instructed in the conveyancing process. The first time buyer will need to supply a closing statement for their ISA together with a completed Declaration Form supplied by the Solicitor.
You can take your money out whenever you want. However, if you decide not to buy, you will miss out on the bonus, but will still receive the interest due and it will still be tax free.
This really is something all first time buyers should consider if for no other reason than for a savings plan with this excellent added bonus.
If you require assistance in respect of a property transaction please do contact us at the office most convenient for you. Details can be found on the contact page of the website.