The Help to Buy ISA was introduced in 2015 to assist first-time buyers in saving for a mortgage deposit by offering a 25% government bonus on savings. However, the scheme closed to new applicants on 30th November 2019. If you need a Help to Buy ISA before this date, you can continue contributing until November 2029 and claim the government bonus until November 2030.
Key Features of the Help to Buy ISA:
- Eligibility: Available to first-to buyers aged 16 or over.
- Contribution Limits: Initial deposit of up to £1,200, followed by monthly contributions up to £200.
- Government Bonus: 25% boost on your savings, up to a maximum bonus of £3,000.
- Property Price Cap: The property must cost £250,000 or less (450,000 in London).
Considerations for Existing Help to Buy ISA Holders:
- Property Price Cap: With the average UK house price reaching £289,723 in July 2024, many properties now exceed the Help to Buy ISA’s price cap. This means you might not qualify for the bonus if the property you intend to purchase is above the threshold.
- Alternative Saving Options: The lifetime ISA (LISA) is another government-backed saving scheme that offers a 25% bonus on contributions up to £4,000 per year, with a higher property price cap of £450,000 nationwide. However, funds must be held for at least 12 months before they can be used for a property purchase, and early withdrawals for non-qualifying purposes incur a penalty.
Is the Help to Buy ISA Right for You?
If you already have this and plan to purchase a property within the schemes price limits, it remains a valuable tool to boost your savings. However, given the current housing market, many first-time buyers may find the property price cap restrictive. In such cases, exploring alternatives like the lifetime ISA could be beneficial.
It’s essential to assess your financial situation, property goals, and timelines. Consulting with a financial advisor can provide you with a financial advisor can provide personalised guidance tailored to your circumstances.
