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A Help to Buy ISA is something all First Time Buyers can benefit from. Whether you decide to use a Government Scheme or go the Standard Mortgage route, you can maximise your savings.
The Help to Buy ISA was an initiative the former Chancellor George Osborne and the Government set up to help First Time Buyers get on the property ladder in December 2015, however the scheme will be closed to new savers on the 30th November 2019.
You will only receive the Government bonus when you are close to completing on the purchase of your property.
The great thing is that a H2B ISA isn’t a per household account, but a per person account. So essentially, you and your partner can get a bonus as little as £600 or as high as £6,000
How much bonus will you get from the Government?
Savings below £1,600 = £0 from the Government as the funds are insufficient
Savings between £1,600 and £12,000 = A 25% top up from the Government
Savings over £12,000 = A £3,000 top up from the Government
How it works:
- You open your Help to Buy ISA
- Make an initial deposit of £1,2000 and the maximum of £200 per month there after.
- Continue saving. Build up a strong balance
- Find a property in your price range, make an Offer and go through the Home buying process
- When you are close to completing on your purchase, your solicitor will apply for your Government bonus.
Things to consider
It’s important to note that there have been many occasions where the bonus is not paid to the applicants until after completion has taken place.
Yes, they got the money and wasn’t scammed out of the scheme, however, the bonus funds couldn’t be used towards the deposit.
If you don’t particularly need the bonus to make up your deposit, this is great as you’ll have funds available to kit out your new home and buy some very needed furniture, accessories and electronics after completion.
The downside is that if you had calculated the bonus in to the mandatory deposit amount which is quite time sensitive in acquiring around exchange etc, then you can find yourself in a bit of a pickle.
Your maximum ISA allowance per tax year is £20,000 – this includes a standard Cash ISA, Lifetime ISA and Help to Buy ISA*
*You cannot get a first-time buyers bonus on both the Help to Buy ISA and Lifetime ISA
What to do?
If you’re a First Time Buyer, I’d 100% say to open a Help to Buy ISA NOW even if you have no desire to get on to the property ladder any time soon
Don’t depend on the ISA to complete/make up your deposit
See the Help to Buy ISA as a post completion fund. A fund to kit out your new home and cover any post completion unexpected expenses.