In the recent budget the Government unveiled a new Help to Buy Isa designed to help first time buyers save a deposit for their first home.
As unveiled in the recent budget there is a new Help to Buy Isa available exclusively for first time buyers to help them save a deposit to enable them to purchase their first home.
With the new Help to Buy Isa the government will add 25% to the monthly contribution made by prospective purchasers. There is no minimum contribution required; however there is a maximum contribution that purchasers are eligible to make of £200 a month, which would qualify for a maximum government contribution of £50 a month.
As an added bonus you can also start the account off with an initial balance of £1,000 and you will have £250 added to the balance immediately.
The Isa’s are only available for the next four years until Autumn 2019, however exact dates are yet to be confirmed.
Unlike other Government schemes, you are not restricted on buying a new build or second hand home.
Help to Buy Isa’s are available exclusively to first time buyers and are applicable to the individual person, rather than for a property purchase, therefore if there are two people looking to buy a property in joint names they would be eligible for a Help to Buy Isa each.
The government has also capped the bonus they will pay in at £3,000. The minimum you need to have saved to get the bonus is £1,600 earning you a £400 bonus, and the maximum the Government will contribute is £3,000. If you save £12,000 you would qualify for the maximum £3,000 bonus.
A Help to Buy Isa can be used to purchase a property with a partner who has previously owned a property, although they would be unable to open their own Isa.
The maximum purchase price is £250,000 to be able to use the savings towards a property purchase, however the limit in London increases to £450,000.
The Isa will continue to earn you interest until it is used, however the bonus is still capped at £3,000 regardless of the balance. The bonus will be calculated and paid when you buy your first home. A voucher will be issued for the bonus and this will go straight to your mortgage lender towards your deposit, so you will not get the bonus unless you do go on to purchase a property. This also means you will not earn interest on the bonus as the money is never transferred to your account.
Richard Powell Director of Ryder and Dutton comments, ‘For many of the first time buyers locally saving a deposit has been a significant hurdle preventing them from getting onto the housing ladder and so the the introduction of the new scheme will provide first time buyers with a head start when saving their deposit’.