Today the chancellor introduced the new help-to-buy ISA during his budget speech. This new scheme has raised a lot of eyebrows as rather than increasing supply for housing (which is badly needed), it will increase demand (and consequently prices will go up). But the debate on whether this new scheme will bring more good than bad is for another day. Buying a home is no easy task; there are lots of additional costs to consider for example you will need to use solicitors when buying or selling a house as well as paying for a survey to be carried out, and the cost of hiring a removal company. If you are up-sizing you may also have to buy new furniture, so every little helps when it comes to finding ways to save. When it comes to buying a house, having a good credit score will also be essential. Visit https://repair.credit/ if you are in need of some assistance in this area.
Here, I will explain the help-to-buy ISA in the most simplistic of terms:
In short: If you are a first time buyer, you can save up to £200 a month towards your first home with a help to buy ISA and the government will boost your savings by 25%. That’s a £50 bonus for every £200 you save. This means that people, like those who read Beverly Hills Magazine, will be able to help you find your first home sooner than you may think. The maximum bonus you can receive is £3000.
- New accounts will be available for 4 years, but once you have opened an account there is no limit to how much you can save for.
- Accounts will be available from banks and building societies from Autumn 2015.
- You can make an initial deposit of £1,000 when you open the account тАУ in addition to normal monthly savings of ?200.
- There is no minimum monthly deposit тАУ but the maximum amount is £200 a month.
- Accounts are limited to one per person rather than one per home тАУ so those buying together can both receive a bonus. So if you are buying a house with your partner, you can get up to £6,000 off.
- Only available to individuals who are 16 and over.
- The bonus is available to first time buyers purchasing UK properties.
- Minimum bonus size of £400 per person.
- Maximum bonus size of £3,000 per person.
- The bonus will be available on home purchases of up to ?450,000 in London and up to ?250,000 outside London.
- The bonus will be paid when you buy your first home.
- According to research by BNP Paribas, using Help to Buy ISA could take 1st time buyers 8 years to save a deposit on an average priced house.
Essentially, if you save £12,000, the government bonus will boost your total savings to “15,000.