Help to Buy ISAs
Are you a first time buyer over the age of 16? Have you opened your Help to Buy ISA yet? No? What are you waiting for?
What is the Bonus
The Government’s Help to Buy ISA Scheme was introduced in December 2015. Is it an affordability scheme to help first time buyers save up a deposit for their first home and get a nice bonus from the Government too by adding 25% of the amount saved, up to a maximum of £3,000 on savings of £12,000.
You can save up to £200 per month in the Help to Buy ISA but in your first month you can put in a huge £1200 to get you off the starting line. You cannot draw any bonus down until you have saved £1600 so putting that lump sum in at the start can really help. Even with a saving of £1600 this gives you a £400 bonus! The maximum bonus you can attract is £3,000 which means you have to save £12,000, saving at £200 per month can take a while so the sooner you open one the better.
Just to bear in mind, as this is an affordability scheme, there is capped limit on your purchase price; for properties in London the maximum purchase price is £450,000, anywhere outside of London it is £250,000.
How and when is the bonus paid?
Once you have successfully had an offer accepted on a property, you need to let your solicitor know that you wish to draw down your bonus towards your purchase.
Your solicitor will then instruct you when to draw down your bonus, this will be near to exchange and completion. You will need to attend your bank in order to close your account. The money you have saved in your Help to Buy ISA account, together with the interest incurred, will be transferred to your current account. The bonus will be held until the solicitors are ready to draw this down direct from the government in readiness for exchange of contracts and completion. In order for your solicitors to draw down the bonus, you will need to provide them with your closing letter from the bank and make sure you have signed a Help to Buy ISA Declaration Form which your solicitor should provide you with.
You will not ‘see’ the bonus as it will go direct to your solicitors. Your solicitors will draw this down in readiness for exchange of contracts.
Even though your solicitor will usually take the bonus into account when providing you with a completion statement requesting your completion monies, it is important to note that this bonus cannot be used towards your deposit.
You’ll be able to open a Help to Buy ISA until 30 November 2019.
For more information please visit: www.helptobuy.gov.uk