First Time Buyer? Get up to £3,000 in cash benefits using the Help To Buy ISA

By James Mcgregor on Jul 23, 2020

If you are a first time buyer saving for a home this year it is important to maximise every penny. The Help to Buy ISA is a great tool to help with this, not only does it pay a great tax free interest rate of up to 3% but the government will also give a 25% bonus pay out on any amount up to £12,000 upon purchasing your home. This must be opened before November 2019, so get in quick!


How Does It Work?

You can open an Help To Buy ISA with a maximum of £1,200 per month and then save a maximum of up to £200 per month. You will receive annual interest on the amounts in the account which will be paid monthly. When you have found the property you want to buy the government will give you a 25%bonus of the final amount in the ISA. You will have to have a minimum of £1,600 to qualify for the bonus. A great upside to this account is you can actually have instant access to the funds.  This means if your circumstance change and you need to use the cash you can do, in this situation you will not be eligible to receive the government bonus. See the chart below to see how the bonus will look.


Who Can Open The Account?

The account is available to any first time buyer aged 16 and above. The criteria for first time buyer states that it is available to any body that doesn’t own a home or has never owned a share in a property at any stage. The account is an individual product, which means if you are buying with somebody you can both take advantage of the Help To Buy ISA and double your bonus. If one of you is not a first time buyer, they will not be able to take advantage of the bonus.


Where Can The Account Be Open?

There are numerous ways the account can be open. If you are looking for the best interest rate then it may be worth having a quick online search. This will tell you who pays the highest rate and it should also give you instructions on how to open the account with that particular provider. The other way would be to speak with your own bank directly, it took me 30 seconds to open mine over the phone.

Can It Be Used On Any Property?

It can be used on any property valued at £250,000 or under, for property outside of London. For property within London it can be used on any property up to the value of £450,000. It can be used with any residential mortgage and does not have to be used in conjunction with any of the government help to buy schemes. It cannot be used on a buy to let property, this has been created purely for the reason to create home ownership and is not to be used as an investment vehicle.


How Do You Access The Bonus Money?

This is your solicitors job, make sure you declare you are using a Help To Buy ISA to fund part of or all of your deposit. At the point o fyour house purchase you will arrange to close down your help to buy ISA, where you will be issued a closing letter from your provider, give this to your solicitor. Close the account when you are nearing exchange of contracts and the bonus is issued upon completion. You can use the money in the account to exchange, but the bonus is not paid out until the completion date so do not calculate this figure as part of the exchange balance that you will need to send to the vendor.


For more information of how this works, feel free to get in touch or speak with your bank. There is a lot of information online, but we know it is sometimes easier to understand financial information by talking to someone.

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