30th November 2019 – a date circled in the calendar of many in the property world. With the Help To Buy ISA deadline quickly approaching, first time buyers need to act fast if they don’t want to miss out on this offer.
While new alternatives will come to the fore, after the November deadline you won’t be able to open a Help To Buy ISA with any bank. So, what does this mean for house hunters and those assessing the best finance options for them?
What is the Help To Buy ISA?
Launched in 2015, the Help To Buy ISA was established to help first-time buyers by giving them an additional 25% on their savings. An initial boost is received as the account is set up, with savers able to receive 25% of up to £1,200 saved in the first month. From the second month onwards, the maximum amount that can be deposited each month falls to £200. The money that will receive a 25% contribution for the length of the ISA is capped at £12,000, but savers can continue to deposit into the account and earn interest until 2029.
Money saved through Help To Buy can be used to buy any home worth up to £250,000, or up to £450,000 in London. There are some helpful round-ups of the best Help To Buy ISAs out there, such as this one on MoneySavingExpert. For all the facts surrounding the ISA, take a look at the MoneyAdviceService.
Already have the ISA?
If you’ve already set up your Help To Buy ISA, this deadline won’t impact on you. You can still continue to add to your ISA until 2029, and will have until December 2030 to claim the £3,000 government bonus. The deadline will only impact on those people were planning to open this ISA but haven’t done so yet.
Why is the Help To Buy ISA ending?
The Help To Buy ISA is coming to an end because the Government has launched the rival Lifetime ISA (Lisa). In theory, the Lisa should enable house buyers to save just as much if not more which is still great news for house-hunters, but the rules are different regarding the withdrawal of funds so savers should read up on the pros and cons to both routes before making a decision.
What about the Help To Buy scheme?
While very similar in name, the Help To Buy ISA is completely separate from the Help To Buy scheme. Launched in 2013, the government’s official Help to Buy: Equity Loan scheme involves the government lending you up to 20% (40% in London) of the cost of your new home. This means that buyers only need a 5% cash deposit when making a purchase and a 75% mortgage to make up the rest.
If you are purchasing your property through the Help To Buy scheme, you don’t need the Help To Buy ISA. Likewise, the ISA money doesn’t need to be put towards the purchase of a Help To Buy property.
If you want to know more about the Help to Buy scheme and how it differs from Shared Ownership, head over to our blog explaining the difference between the two purchasing options here. Interested in the ISA? You still have time before the November deadline so start investigating today to make sure you don’t miss out.