While the headline above may seem like clickbait, there’s actually truth in it. Three grand’s worth, to be precise!
November 30th is the cut-off date for first-time buyers who would like the government to contribute £3,000 to their deposit kitty - which, we’re guessing, is all first-time buyers - so the time to act on this is NOW if you haven’t already done so.
What exactly are we talking about? A scheme that goes by the name of Help to Buy ISA, which is coming to an end at the end of 2019’s eleventh month.
What is a Help to Buy ISA?
A Help to Buy ISA is basically a savings scheme that allows first-time buyers to save money tax-free, with the additional benefit of receiving a handy 25% bonus from the government on any savings they make (up to a maximum of £3,000).
So, if you save £10,000, the government will add £2,500 to your kitty...for nothing!
Those with £12k will receive the maximum amount, £3,000, and the interest you receive will be 100% tax free.
This isn’t to be sniffed at, as some banks and building societies are offering interest rates of up 2.6%, way better than a bog-standard current account and you won’t pay any tax on it, either.
You cannot, however, save more than £12,000 in a Help to Buy ISA.
How long can I save money for with a Help to Buy ISA?
Here’s the kicker - you only have until the 30th November 2029 to save up, although you can still take advantage of the bonus payment providing you use it by December 1st the following year (2030).
Plus, you can’t put the whole £12k into an ISA in one go and withdraw a tasty £15k the week after; it doesn’t work like that, unfortunately. Your initial deposit can only be a maximum of £1,200 and there’s a monthly savings limit of £200 after that, too.
Essentially, this means that it’ll take the best part of five years to get the maximum payout from the government. However, if you’re not in a rush to move, why wouldn’t you take advantage of the scheme?
There’s also a minimum bonus to bear in mind, so you can’t put £100 in and expect £125 back. The payout begins at £400, which means you’ll have to deposit at least £1,600 before any bonus can be claimed.
Is it one Help to Buy ISA per property or individual?
There’s good news if you are saving as a couple: you can both take advantage of the scheme, as Help to Buy ISAs are issued to individuals, not properties.
This means that you could end up with £6k of free money, providing you have enough savings, of course.
Who can take out a Help to Buy ISA?
The criteria for eligibility is as follows. You must:
- be 16 or over
- have a valid National Insurance number
- be a UK resident
- be a first-time buyer, and not own a property anywhere in the world
- not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps.
What qualifies for the Help to Buy ISA bonus?
There are a few qualifying points surrounding the payment of the government bonus. Basically, the property you intend to buy must:
- be in the UK
- have a purchase price of up to £250,000 (or up to £450,000 in London)
- be the only home you will own
- be where you intend on living
- be purchased with a mortgage
Next steps
You might be thinking, This is all well and good, but I don’t have any savings yet, so what’s the point?
Well, there’s more good news: you can open up a Help to Buy ISA anyway, as all you need is £1 to get started. Yep, a quid will get you off and running.
You must, however, act now. The November 30th deadline is rapidly approaching and even if you don’t end up taking advantage of this generous scheme, you would have only lost a pound. So, get searching for the best Help to Buy ISA interest rates and open one up before it’s too late.
For more information on Help to Buy ISAs, please visit the official page at: https://www.helptobuy.gov.uk/help-to-buy-isa/
Petty Son and Prestwich have been helping people achieve their property dreams in and around Wanstead, E11 for well over a century, and we will still be doing so when you get your deposit together.
If you need any help or advice along the way, don’t be shy. We’d love to offer a helping hand wherever we can, so feel free to get in touch with one of our friendly members of staff with any questions or concerns you may have.
Good luck and happy saving!
