Help to Buy ISA – Everything you need to know

If you’re looking to buy your first home, the Help to Buy ISA probably sounds like a good idea. But will it help you get on the housing ladder? We asked the Money Advice Service to explain how they work.

 

When will they be available?

Help to Buy ISAs have been available since December 1, 2015.

How much can I pay in?

You can open a Help to Buy ISA with a maximum deposit of £1,000, and then pay up to £200 a month into the account.

What will I earn?

The government has promised to top up savings by 25%, up to a maximum of £3,000.

You’ll also earn the standard interest rate offered with the ISA. This will vary depending on who provides your Help to Buy ISA.

How is the bonus paid?

The bonus money will go straight to your mortgage provider when you buy the house.

Is there a minimum I need to save?

The minimum you can save to qualify for the bonus is £1,600. That would give you £400.

How long will it take to get the money?

To get the full amount of £3,000, it would take you four and a half years to save £12,000, assuming you pay the £1,000 deposit and the maximum £200 every month.

How many can I have?

You will only be able to take out one Help to Buy ISA per person, but this isn’t per property. This means joint buyers can pool their cash and bonuses on the same house.

What if I already have an ISA?

If you have paid into any other ISA in the financial year and you want to open the Help to Buy ISA, you can’t pay any money into it. That means anyone who has made a payment into an ISA since April 6 2017 will have to wait until April 2018.

When does the offer end?

They’ll be available for four years after they are first available, so until autumn 2019. You can keep saving in them for longer though.

Is there a cap on the value of the property?

Yes, in London it can be used on any home worth under £450,000. Elsewhere in the country the home can’t cost more than £250,000. The property must be in the UK.

Do I have to use it on a Help to Buy property?

No, you’ll get the bonus on any mortgage.

Can I use it on a buy-to-let property?

No, it’s only for first time buyers who want to live in the property, not rent it out.

What can I do now?

You can start saving for the £1,000 deposit. Aim to put it in an account with the highest interest rate.

What else do I need to know?

Buying a house isn’t just saving for a deposit and enough to make your monthly mortgage repayments. Mortgage lenders will want you to prove you can afford them – now and in the future.

They’ll look at how you would cope financially if interest rates rose or if you had a life changing event such as having children or being made redundant. They’ll also look at your finances – and how you spend your money – to get a sense of how affordable your repayments will be.

Find out what you could afford with the mortgage affordability calculator from the Money Advice Service:

Get in touch


Beverley Hub: 01482 867979
beverley@graysandco.net

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commercial@graysandco.net

York Hub: 01904 622252
york@graysandco.net

Pocklington Hub: 01759 305265
pocklington@graysandco.net

Lettings Management 01482 240234
lettings@graysandco.net

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