Help to Buy ISA
To help first time buyers get on to the housing ladder, the government is introducing a new form of ISA from Autumn 2015 called the Help to Buy ISA. It has all the tax advantages of a cash ISA but is also topped up by the government by up to an additional £3,000. It is designed to help first time buyers save enough to put down a deposit for their first home.
The Help to Buy ISA will be available through banks and building societies. First time buyers that save through a Help to Buy ISA receive a government bonus to help encourage them to save.
How does it work?
The saver opens up a Help to Buy ISA (H2BISA) at a bank or building society. You will need to be over 16, have your National Insurance No. and be a first time buyer. You can only open one H2BISA and the saver can save a maximum of £200 per month into the H2BISA. The government will increase this by 25% when the saver buys their first house.
You can deposit a lump sum of up to £1,000 into the account as you open the account. The maximum amount that can be saved under the H2BISA is £12,000. The government will top this up by 25% of the amount saved, to a maximum of £3,000 to bring the total saved to £15,000.
The bonus is paid when the saver commits to buying a property as their main residence (not buy to let). The bonus is subject to a minimum claim of £400 (requiring a minimum of £1,600 of savings).
The amount saved can help pay the deposit on a house up to the value of £250k outside London and £450k in London.
It is intended that H2BISA accounts will be limited to one per person not one per household, so a couple could put two H2BISAs together to buy a home. In theory a number of people could club together to buy a house although there may be some restrictions put on this when they are released in the Autumn 2015.
Once an account is opened there is no limit on how long a person can save into a H2BISA and no time limit on when they can use their government bonus.
For further information see https://www.gov.uk/government/publications/help-to-buy-isa
Contains public sector information licensed under the Open Government Licence v3.0.
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