Help to Buy ISA
Help to Buy ISA for first time buyers
First time buyers will be able to benefit from a new government-funded saving initiative due to launch this autumn, the Help to Buy ISA. This brand new tax-free§ savings product is part of the latest drive designed to help get people onto the housing ladder.
With a Help to Buy ISA you can save towards a deposit for your first home, earning a 25% bonus on up to £12,000 in savings when you come to buy. There’s no minimum monthly deposit and you can save up to £200 each month.
Who can open a Help to Buy ISA?
First time buyers – anyone who has never owned a property before – aged 16 and over.
How much could I earn?
Under this new scheme the government will top up your savings by 25%, so for the maximum monthly saving of £200 you will earn £50.
The maximum government contribution is £3,000, for those able to save £12,000. As the bonus is added when you buy your property, you will not earn interest on it.
When can I apply for a Help to Buy ISA?
From autumn 2015, which is when the scheme is expected to open, you can apply. However, you can open an account at any time within four years of the scheme launching.
Can I open a Help to Buy ISA as well as a cash ISA in the same tax year?
You can only subscribe to one cash ISA each tax year. This means you won't be able to put money into a cash ISA and a Help to Buy ISA at the same time. If you have more than £200 a month to save you could benefit from some of the major changes to the taxation of savings announced in the 2015 Budget. From April 2016 individuals will benefit from a new Personal Savings Allowance of up to £1,000 for basic rate taxpayers, and up to £500 for higher rate taxpayers. Additional rate payers will continue to pay tax on all their savings income.
Can I open more than one Help to Buy ISA?
No, each first time buyer can only open one account for the life of the scheme.
How long is the scheme available for?
Anyone interested in opening a Help to Buy ISA must do so within four years of it becoming available. You can however keep the savings account open indefinitely.
Who will offer Help to Buy ISAs?
The Help to Buy ISA will be available from some banks and building societies.
Is there an upper limit on the purchase price?
You won’t qualify for the scheme if the home you intend to buy costs more than £250,000 (£450,000 in London).
How is the bonus paid?
The bonus will be paid to your mortgage lender by voucher once you’ve bought a house.
What if I am buying a house with another person or group?
The Help to Buy bonus is granted per person not per purchase so partners or friends who are first time buyers can each raise an extra £3,000 tax-free§ with one of these savings products. For example, a couple that is able to save £12,000 each will in total have a £30,000 deposit, including the government bonus of £3,000 each.
What if I am buying a house with someone who is not a first time buyer?
You can still benefit from the Help to Buy ISA, however the person you are buying with cannot.
For more information on the Help to Buy ISA visit Gov.uk
This guide is intended as a summary only and does not constitute legal advice given by Leeds Building Society. No reliance should be placed on this guide and you must make your own decisions, we recommend that you seek legal and/or financial advice if you have any questions or queries.