1. What is the Help to Buy ISA?
Introduced in the 2015 Budget by George Osborne, the Help to Buy ISA scheme helps First Time Buyers build a deposit for their first home with financial assistance from the Government.
2. How does the ISA work?
In a nutshell, for every £200 you place into your Help to Buy ISA, the Government will contribute a further £50.
Although there are minimum and maximum Government contributions (see question 5), you have the option to place an initial £1000 when you open your ISA. If you do this then the Government will provide you with £250. If you decide not to then you will need to save at least £1600 before you reach the Government’s minimum contribution (see question 5).
3. Am I eligible?
You must be over the age of 16 and a First Time Buyer (by this we mean you must not have owned property at all either now or in the past).
4. When does the Scheme begin and end?
The Scheme will begin in Autumn 2015 and you will have four years to open an ISA until Autumn 2019 (exact dates to be confirmed). Once the account is open, you can pay into it for as long as you want.
5. What are the limitations?
The minimum Government contribution is £400 (so you would need to save at least £1600) and maximum of £3000 (which would require you to save £12,000).
The scheme is only eligible for properties up to £450,000 in London and £250,000 outside of London.
You will not be able to contribute towards a Cash ISA as well as a Help to Buy ISA in the same tax year. So if you open a Cash ISA after 6th April 2015, or make contributions towards an existing one after this date, you will have to wait until the next tax year to open a Help to Buy ISA.
6. How many ISAs per House Purchase?
One of the attractions of the Help to Buy ISA is that it is available per person and not per house purchase. This means that if two of you are buying a home you both have the option to open separate Help to Buy ISAs and individually save £12,000 each. Assuming both were able to save the maximum £12,000 and each receive £3000 from the Government, you could have a deposit of £30,000 to place towards your first home.
6. My partner isn’t a First Time Buyer, can I still get one?
Your Partner will not be eligible for the Scheme, however as it is per person and not per house purchase, you can still open an ISA and assuming you save the maximum £12,000, receive £3000 from the Government.
8. How can I apply for one?
The ISAs will be available through Banks and Building Societies in the same way as Cash ISAs are.
9. What mortgage can I take out?
You can use any type of residential mortgage deal that you want and are not restricted to Help to Buy Mortgages.
However, it’s important to note that the mortgage process and criteria remains the same.
To help you understand what else you need to think about, we recommend you read our First Time Buyer Tips.