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5 things you need to know about the Help to Buy ISA

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20 March 2018 | Money Matters

The Help to Buy ISA has helped more than 100,000 first-time buyers get onto the property ladder since it was launched in 2016. But what is it and how does it work? Here we outline the 5 things you need to know about the Help to Buy ISA.


Who is it for?

The Help to Buy ISA is a savings account specifically aimed at people saving up to buy their first home. In order to open a Help to Buy ISA you must be aged 16 or over, a UK resident and a first-time buyer. The money saved in your account can be used to purchase a home worth up to £450,000 in London and £250,000 in the rest of the country.


How does it work?

As with other cash ISAs, you earn interest free of tax on the money saved in your account. However, with the Help to Buy ISA, you also get a 25% government bonus on top – so for every £100 you save, you get an extra £25. You claim your bonus when you are ready to buy your first home and you can use this towards your deposit. You need to save at least £1,600 to claim the minimum bonus of £400. The maximum bonus you can receive is £3,000, for which you will need to save £12,000.


How much can I pay in?

You can pay up to £200 each month into your Help to Buy ISA, as well as an additional lump sum of £1,000 in the first month of opening your account. There is no requirement to pay in money each month, but if you don’t use your full allowance one month, you can’t roll it over to the next. And although there is no penalty for making withdrawals from your Help to Buy ISA, you will not be able to replace any money you do take out – so if you pay in £200 one month and then withdraw it, you will have to wait until the following month to make another contribution.


How long will it be available for?

You have until 30th November 2019 to open a Help to Buy ISA, after which they will no longer be available to new savers. Those who open an account before then will be able to continue saving into it until 30th November 2029, and will have until 1st December 2030 to claim their bonus.


Which providers offer it?

According to the government website there are currently 13 banks and building societies offering the Help to Buy ISA. Among those currently offering the best interest rates are Barclays, Virgin Money and Nationwide.


Are you using the Help to Buy ISA to save up for your first home? Let us know on our Facebook pageOr, check out our page on Help to Buy for more information.


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