If you are looking to buy a house, a Help to Buy ISA is an option for first time buyers saving towards their mortgage deposit. However, if this is something you are considering you will need to open it by 30 November 2019, after which it will no longer be available.
How does it work?
The scheme was introduced by the government on 1 December 2015 and allows first time buyers to receive a bonus of 25% on their savings. The government will pay up to a maximum of £3,000 bonus towards your house deposit. For example, if you save £2,000 towards your house deposit you will receive £500 bonus and if you save £12,000 you will receive a bonus of £3,000.
When you first set up the account you can put in up to £1,200 and then up to £200 per month after that. Bear in mind in order to receive the bonus you will need a minimum savings of £1,600.
You can only use the bonus if you are purchasing a property with the aid of a mortgage and for houses costing £250,000 or less. However, if you are purchasing in London you can purchase a property costing up to £450,000.
What is meant by a first time buyer?
A first time buyer is an individual who has never owned an interest in a residential property in the United Kingdom or anywhere else in the world, whether it was inherited or purchased.
Can I still open a Help to Buy ISA if my partner owns or owned a property in the past?
Help to Buy ISA’s are for individuals and therefore, if you are a first time buyer aged 16 or over and are purchasing a property with someone who owns or previously owned a property, then you will be the only one that can open the account.
If on the other hand you both are first time buyers aged 16 or over, then you both can open an individual account and receive a bonus of up to £3,000 each.
What if I already have a Help to Buy ISA?
You can continue to save in your Help to Buy ISA until 30 November 2029 and will need to use the bonus by 1 December 2030.
How to claim the bonus
Once you are ready to purchase a house, you will need to close your Help to Buy ISA account and transfer the savings into another account. The bank will provide you with a closing statement, which you will need to provide to your solicitors in order for them to request the bonus on your behalf.
It can take up to 2 weeks once you close your account to your solicitors receiving the bonus on your behalf. Therefore, you can close your Help to Buy ISA as your house purchase progresses and not when your offer is accepting on a house.
Walker Solicitors is a trade name of Walker Solicitors Ltd. Registered in England (Company No: 9608224). Registered office: 206a-212 Stafford Street, Walsall WS2 8DW. A list of members is available for inspection at this office. We use the word ‘partner’ to refer to a member of the company or an employee or consultant who is a solicitor with equivalent standing and qualification.