Help to Buy ISAs explained

Matthew Barrand Investment

Help to Buy ISAs were launched at the end of 2015 to give people the incentive to save for a property, with some extra help from the government. You can save a maximum of £12,000 into a Help to Buy ISA and, in return, get a total £3,000 in bonuses. You’re restricted, however, to paying in £200 per month, topped up with a £50 bonus from the Government.

The Help to Buy ISA is now closed to new applicants, but existing account holders, have until 1 December 2030 – another 9 years to claim their bonuses.

You have to get a mortgage (so you can’t get the bonuses if you’re buying the property outright in cash) but, crucially, you don’t have to take out a loan with the provider of the ISA you’ve opened.

You cannot have a Help to Buy ISA if you’re an existing homeowner, but that doesn’t prevent you from buying a property with someone who is a First Time Buyer, who can use this savings scheme when buying with you in the future. In this scenario, the First Time Buyer can continue to save into the ISA and receive the bonus.

When does the bonus become payable?
The bonuses only become payable on completion of the property. When you are ready to buy, tell the bank and close your ISA account and you should be given a closing letter. When this is handed to your conveyancer or property solicitor, they will apply for the bonuses, which will be used to complete the purchase of your property with your cash deposits and the bonuses.

The thing to remember here is that your bonuses are paid only right at the end of the transaction, so it is important to tell your property solicitor as early as possible that you hold a Help To Buy ISA.

If you have any questions regarding Help to Buy ISAs or are thinking of buying a property for the first time please give the office a call.