Help to Buy ISA’s

Another boon for the first time buyer in Chancellor George Osbornes latest budget was the new Help to Buy ISA for first-time buyers which will allow the Government to top-up by £50 every £200 saved for a deposit from this Autumn. You can save up to £200 every month and the Government will add 25% on top. You can also start it off with an initial £1,000 which will have £250 added on top of it. The Help to Buy ISA offers relief on the money made towards a house deposit ,the minimum you need to have saved to get the bonus is £1,600 (so a £400 bonus), and the maximum the Government will contribute is £3,000 (which would means you will have saved £12,000).

But couples buying their first home together who don’t want to wait four and a half years to get the Government’s full £3,000 relief on a Help-to-Buy Isa should open an account each.  By doing this they can save the same sum in less than half the time - but both parties need to be first time buyers.

In many way this is equivalent to letting you save for a home deposit from your pre-tax income as the 25% on top is equivalent to the tax a basic-rate taxpayer would pay. To get a £3,000 top-up at the earliest opportunity an individual would need to save £1,000 from opening and £200 every month for 55 months. And a couple each saving the maximum initial deposit of £1,000, followed by the maximum monthly deposits of £200 would get the £3,000 top-up in 25 months.

The Help to Buy ISA will be available through banks and building societies and rates will be set by them and differ just as with other cash ISA’s so  you will earn interest like a normal cash ISA as well as getting the bonus at the end.

Your home could be at risk if you do not keep up your mortgage repayments

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