What You Need To Know About The New Help To Buy ISA
ISAs have been a major part of the UK savings account scene for several years now, with savers making full use of the tax advantages on offer when saving through an ISA.
Recently though, the government announced a new type of ISA aimed squarely at first-time buyers who are trying to save a deposit to buy their first home, the Help to Buy ISA.
So what is the new Help to Buy ISA all about and what are the advantages of saving in this kind of account? Let’s take a look at some of the details.
Who can use a Help to Buy ISA?
The first important point of note is that you do not have to be buying a house through the Help to Buy Scheme in order to take advantage of the benefits of this account.
As long as you are a genuine first-time buyer and have not previously owned a property anywhere in the world, then you are eligible to receive a 25% top-up on your savings.
This 25% top-up will be handed over by the government when you come to use your savings to put down a deposit on your first home.
How much can you save in a Help to Buy ISA?
The maximum amount you can save in a Help to Buy ISA is £200 per month. On top of this you are also allowed to pay a one-off payment of £1000 into the account when you first open it up, therefore you are able to place £1200 in the first month.
While there is currently no limit on how long the account can stay open, there is a limit on the total bonus the government will pay when you come to buy your home.
This limit has been set by the government at a maximum bonus amount of £3,000 on £12,000 worth of savings, which is the 25% top-up level mentioned earlier.
There are also limits to the value of the property that you can buy in order to receive your Help to Buy ISA top-up bonus from the government.
These limits are currently set at a maximum property purchase price of £450,000 in the London area, and £250,000 for homes bought in the rest of the UK.
More about the bonus
ISAs are known for their tax benefits, and the Help to Buy ISA is no different. The 25% top-up bonus that you will receive from the government will be tax free.
It’s also worth noting that the bonus will be paid not just on the money you personally put into the account, but also on any interest which is accumulated while the ISA is in place.
With recent announcements from banks indicating that they will be offering up to 4% interest on Help to Buy ISA accounts, this is a great opportunity for those who are desperately trying to save up a deposit for their first home to get a tax-free leg up from the government, and a great savings rate too – at least compared to the rates being offered by banks on standard cash ISA accounts.
Latest posts by Paul (see all)
- Everything You Need to Know About Unauthorised Overdrafts - December 10, 2018
- Haggling 101: How to Get the Best Deal - December 7, 2018
- Cut Your Car Insurance With These Gadgets - December 7, 2018
- Top Tips For Cutting Your Mobile Phone Bills - December 5, 2018