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Can a Help to Buy ISA help you buy a home?

Saving for your first home can take a while. Rising house prices, especially in London, mean the deposit required can be pretty big. So can the new Help to Buy ISA get you on the property ladder any faster?

Launching on 1 December, the Help to Buy ISA is a new scheme designed to give a big bonus to the savings of first-time buyers. There’s potentially a £3,000 bonus available, which can go a long way to boosting your savings pot.

There are conditions attached though, so to work out if it’s right for you we’ve produced a quick Q&A.

Who can get a Help to Buy ISA?

Anyone who doesn’t own a property can open a Help to Buy ISA. You need to be over 16 and a UK resident. It’s one account per first-time buyer, which means two first time buyers who plan to buy together can each save into their own Help to Buy ISA.

How much can you save in a Help to Buy ISA?

When you open an account, you can pay in a maximum of £1,200. After that you can make deposits of £200 a month.

Where can you get a Help to Buy ISA?

Many banks and building societies will be offering a Help to Buy ISA.

How much money will you get?

On top of any tax-free interest you earn, the government will top up your savings by 25%.

When can you get the bonus money?

If you save the maximum of £12,000, you’ll receive a bonus of £3,000, though the quickest you could save this amount is just under four and a half years.

The minimum is £400, which would require £1,600 to be deposited but could be saved in just three months.

You receive the bonus when you buy your first home. However, you can’t then rent the property out after you buy it.

Where can you spend the money?

You can only spend the money on the deposit for your first home. If you don’t buy a property, you won’t get the bonus.

You also don’t get it directly. Instead it’s arranged for by your solicitor who adds it to your deposit.

There’s also a cap of £250,000 for the property’s value, rising to £450,000 in London.

What if you already have an ISA?

You can’t pay money into more than one ISA in the same tax year. This means if you’ve already deposited money into another ISA since 6 April you’ll have to wait until April 2016 to open a Help to Buy ISA. However some banks and building societies will let you transfer an existing ISA you have with them into one of their Help to Buy ISAs.

What do you think?

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  • Margaret Ndiritu / 5 April 2016

    Help to buy ISA is a very good idea for the first time buyers who can afford to save the minimum amount required in order to qualify. I do wish however they spare a thought for the older generation who may also be struggling to get a mortgage for various reasons.

  • MICHAEL SOLANI / 28 December 2015

    I need maney to buy home.

  • Jen / 27 December 2015

    The answer you provide in this article to the question "What if you already have an ISA?" is not what I was told by Natwest. I explicitly asked them about this when I opened a Help to Buy ISA because I already had an ISA with them. They said that I could have both but would only be able to save tax-free up to the amount allowed per year on the two accounts combined. So basically, I would be able to pay into both as long as I don't go over the £15,240 on both accounts combined.

  • Angela Goulden / 27 December 2015

    It would seem that the different banks have different rules regarding the help to buy isa. Lloyds (who I currently bank with ) will not allow anyone who has previously had a mortgage to access the scheme. I have jointly owned property in the past but never had a mortgage just on my name , I am currently living with parents and hope to buy a house in Autumn 2016. I would have thought the same rules would apply across the board is this not the case. I look forward to your input. Thanking you

  • Lisa cullen / 27 December 2015

    This isa sounds great for me and I've calculated that I could buy in just over two years but as I've been renting for 8 years I'm still not convinced that buying is the way to go for a singleton so any advice would be gratefully appreciated! Lisa Belfast

  • Alejandro Mery / 1 December 2015

    I live in Brighton and around here the 250000 cap makes thos ISA useless. It's impossible to find anything for that price.