Are you a first time buyer? If you save for a mortgage deposit in a Help To Buy ISA the government will add an extra 25% on top of the amount you have saved!
But, time is running out!
When is the deadline?
The deadline to open a Help to Buy ISA is Saturday 30 November.
How much money do you need to open one?
All you need is just £1 and you can be eligible for up to £3,000 towards your first mortgage.
Who is eligible?
You need to be a first time buyer ages 16+. You have to have a valid national insurance number.
What does the government add?
The government will add 25% tax-free to whatever the amount is in the ISA when it is used to buy a home. There is even a bonus of up to £3,000 if your total amount in your ISA is £12,000.
The minimum amount in your ISA to get a bonus is £1,600 and you can get a bonus of £400.
Buying a house together?
If you are both first time buyers then you can both get a Help to Buy ISA.
Can I use the bonus on the house deposit?
Be aware that the Help to Buy ISA bonus is for the mortgage deposit not the house deposit. You only get the government’s bonus with the Help to Buy ISA bonus on completion. So if you are planning on using the bonus towards the house 10% deposit. You may need to speak to the seller to agree on a lower deposit that you can afford.
You get the bonus when you become the legal property owner.
It is designed to help cut the cost of your mortgage and reduce the amount you need to borrow.
If this is an issue for you, the Help to Buy ISA might not be the best option for you. A Life time ISA pays you a bonus monthly.
What happens if my circumstances change?
If you find yourself in a new job down the line where you have to move abroad then you can still rent out the property you have even if you used the Help to Buy Isa. You can not rent out the property if renting is your intention when buying. You may have to pay the bonus money back.
Will I lose my money if I don’t end up buying my first home?
You will not lose your money. In fact you can withdraw all of your money penalty free.
What happens if I have already invested the money into a cash ISA?
A Help to Buy ISA counts as a cash ISA. You can only make payments into one of these ISA’s in the same tax year.
You can transfer your savings over into a Help to Buy ISA but, this depends on the total amount of you have paid into your cash ISA this tax year.
The best option is to speak to your provider if you are wishing to transfer as not all providers allow this option, especially, if you have paid more than £1,200 since April.
If you have paid more that £1,200 into a cash ISA, you will need to open it with a provider that allows you to transfer and then ‘split’ your cash ISA.
Natwest and Nationwide allow you to open the Help to Buy ISA and the cash ISA where as, other providers if you have paid £1,200 will make you either withdraw £200 or invest the £200 into stocks and shares. Again speak to your provider if you need more advice.
What happens if I can’t make the max payment this month?
Still open one and keep your options open. You just won’t be able to make a double amount next month. You will only be able to put in £200 not the £1,200 the first month offers.
If you are interested in the Help To Buy ISA then you can apply online right up to the closing date. But, remember the closing date is approaching so don’t leave it until last minute.
You don’t need to be currently banking with the ISA provider and you don’t have to have your mortgage through the same provider either.