If you are planning to buy your first property, time is running out for you to open up a help-to-buy individual savings account (ISA) before the 30 November 2019 deadline and take advantage of the Government’s incentive.
What is a help-to-buy ISA?
Since 2015, banks and building societies have been offering these help-to-buy ISAs to first-time buyers.
New savers can deposit a lump sum of up to £1,200 when they first open the account, following this, each month you can save up to £200 a month.
The Government will then boost your savings by 25 per cent, so for every £200 saved, first-time buyers can receive a bonus of £50.
The minimum Government bonus is £400; which means you need to have saved at least £1,600 into your ISA before you can claim your bonus. The maximum Government bonus is £3,000 and to receive that, you need to have saved £12,000.
What does the money have to be used for?
To receive the Government bonus, the money must be used to buy a home up to the value of £250,000 outside London, or up to £450,000 in the capital. In addition, this must be your only home, and it can’t be rented out or used as a holiday home.
Who is eligible?
To qualify, you must be 16 or over and be a first-time buyer. If you have paid into a cash ISA this tax year, you will have to transfer the money over into the Help to buy ISA.
What happens after 30 November 2019?
These ISA’s won’t be available to new savers anymore; however, if you have opened your account before then with as little as £1, you can keep saving into it until November 2029.
After November 2029, your account will be closed to additional contributions and you must claim your bonus by 1 December 2030.
How does it work with the bonus money?
When you are near completion of buying your property, you will need to instruct your solicitor or conveyancer to apply for it. This money will then be added towards your deposit that you are putting towards your first home.
You will only receive the bonus money on completion, not at the exchange stage where buyers typically put down a 5 per cent or 10 per cent deposit to guarantee the purchase.
Contact Home of Mortgages
Buying your first house is one of the most important purchases you will make. At Home of Mortgages, we aim to make this a stress free event by guiding you through each step of the process so that you fully understand what is ahead. For more information, go to http://bit.ly/2IVKVNk