Getting on that first rung of the home-owning ladder can be difficult, especially now that the average house price in the UK is £226,906* and the minimum deposit amount would be £11,345.30 on a home of this value.
If you’re looking to get a more attractive rate on your mortgage, you’d be looking at a 10% deposit which equates to £22,690.60. Maybe you’re just starting to think about buying your first home and the deposit amount required seems daunting, how would you like up to £3,000 towards it???
In December 2015, the government launched the “Help to Buy ISA”. The savings, like any ISA, are tax free but have the added benefit of a top up from the government of up to £3,000. The government scheme will contribute an additional 25% of your savings as long as you meet the criteria and save at least £1,600 (maximum £12,000). To be eligible, you must be classified as a first-time buyer and not own any other property. The best news is that this scheme is available to individuals and not per home, so if there are two of you buying a property together, you could get as much as £6,000 towards your deposit.
To get this bonus, you’ll need your solicitor to apply for the top up once your offer has been accepted. The solicitor will then be able to put the funds towards your deposit amount.
So, how do you qualify?
- You must be a first-time buyer.
- You must be aged 16 or over.
- The home you are purchasing must be under £250,000 (£450,000 in London).
- The funds from the Help to Buy ISA do not have to be used on a Help to Buy mortgage, you can use the funds for any types of mortgage.
- You can’t buy a property to rent out using the Help to Buy ISA
- The property has to be in the UK and not overseas.
- You can only have one Help to Buy ISA.
- You can only open one tax ISA in the same year, so you can’t open a Help to Buy and a Cash ISA in the same year.
Help to Buy ISAs are only available until 30th November 2019, after this date no savers will be eligible to apply. You will then have until 1st December 2030 to claim your bonus from the Government.
For further information on the Help to Buy ISAs visit https://www.moneyadviceservice.org.uk/en/articles/a-guide-to-help-to-buy-isas.
