Help to Buy ISAs - Future homeowners act now - the deadline is Saturday 30th November 2019

 

Buying property has never been an easy endeavour. There are a lot of roadblocks set up for the first time buyer and it can make things quite difficult when it comes to financing their first property. Thankfully, the government does seem to recognise this, which is why they implemented the help to buy ISA. It’s a special scheme that is there to help you to buy a property for the first time. However, the service is coming to an end, so it’s probably useful that you know how to apply for an ISA, what it entails and how long you have left to get one. 

To begin with, let’s refresh on what a Help to Buy ISA is and how it helps. The government launched this scheme to help first-time buyers get a helping hand in purchasing their first property - and it's a great deal! They recognised that in modern Britain it is difficult for people to try and finance their first home which means that they have set out to offer support for people who need it.

 

Basically how it works is the government will top up your contributions (anything you save in this Help to Buy ISA) by 25%. The ISA is for people who need help with saving up for a mortgage deposit. So long as you are classed as a first-time buyer and do not own property in other parts of the world, you qualify for their assistance. 

 

To give an example, every £200 you save, you’ll get an extra £50 from the government. The value of this will extend up to £12,000, which is the government limit. So it is possible to get a £3000 contribution for help in purchasing your property. Understandably, this a powerful incentive. The savings begin to really show their benefits when you manage to accumulate £1600 in your account, which will then be boosted 25%, given you another £400 towards your mortgage deposit.

This whole system may well seem quite enticing for people who are looking to try and get their hands on some extra help for buying a home. The only problem is that the deadline for these ISA’s is nearly up. After the 30th of November 2019, you will not be able to open a new Help to Buy ISA. 

 

Obviously, such limitations on the system can be problematic for people who want to apply for such an ISA. Those who already have pre-existing accounts can keep making payments, but anyone who wants to apply from the beginning will find that after the 30th, you'll be out of luck. You can open a Help to Buy ISA with as little as £1 (and up to £1200 in your first deposit). After this, you have until December 2030 to claim on the money you've saved, which is worth noting for long-term investments/savers.

So you might be wondering if you are someone who can qualify for a scheme of this nature. Well, there are quite a few prerequisites and requirements, but don’t let this stop you. If you’re over 16 and are a first-time buyer, then you already tick two of the criteria required. The scheme only applies to those properties which are worth £250,000, but the upper limits are raised to £450,000 if you are in the London area. 

 

Thankfully, the ISA itself can be used for any mortgage and is not restricted to a Help to Buy one or anything specific like that. The only conceivable downsides are that you can’t use or claim an ISA bonus if you are planning to rent the property, you can’t use a Help to Buy ISA if you’re trying to buy a property abroad, and you can’t have more than one at any given point. However for most first time buyers looking at getting on the property ladder within the next 10 years - this is likely a fantastic opportunity for you.

 

So you will probably wonder if you should bother with this type of scheme, considering that it’s about to go out of commission in just a few weeks. Well, what you really have to think about is the benefits that can come from something like this. The 25% contribution that the government provides is much more than any person can accumulate on interest via a personal savings account. Second of all, traditional savings accounts are often subject to interest rates, and after the first thousand pounds saving, basic rate taxpayers will have to pay an additional tax.

 

Because of how the system works, your best bet is to take full advantage of a Help to Buy ISA and optionally open a standard savings account in tandem with the government scheme. This is because at the end of the program if you invest the maximum amount into your potential mortgage, you will have £15,000 available to you. £12,000 of that will come from your own money, and the remaining £3000 will be a contribution from the government. Any savings you have accumulated outside of this can go towards furnishing your new home, or any lifestyle improvements you may like.

So let's recap

There are a lot of benefits to come from a scheme of this nature. Obviously, you get access to government contributions to what can otherwise be a very expensive endeavour, meaning you hit your deposit target sooner - and buy that all-important first home.

It’s heavily advised that you research this prior to beginning with it because there’s a lot of different options to think about and many roads to go down. There is no doubt that this can be a highly successful opportunity - and one soon to be missed! After all, affording a house is not cheap. The first time buyer will find that there are a lot of things that they need to do to try and make sure that they have the ideal house, and for a lot of people they never actually get to this point because of the lack of guidance, advice and support. 

 

You have to balance the risks with the potential rewards. But above all else, you need to move quickly. It’s important to act now to get what you need. There are many different banks which offer Help to Buy ISA's, and we're always on hand here at Love Mortgages to offer you advice and guidance on any aspect of buying your first home. However, there is a window on how long you can apply for this. The scheme will still work for people who have already opened their Help to Buy ISA, however, if you want to apply, you need to move quickly to do so. The 30th isn’t that far away.

Need help?

Call us today on 01244 90 44 10 and ask about getting your first ever mortgage. Our friendly team of advisors would love to hear from you and will make every effort to offer you the help and support you need in order to make that first home a reality.


Disclaimer: Any mortgage offer forms a contract between you and the lender. It is important that you always take time to check that the offer they provide you with is exactly what you required, before agreeing to proceed. A good mortgage advisor will always assist you with this. Finally, property values may fluctuate according to the conditions of the market. This may affect your savings and investment. This can be addressed and explained in more detail by your mortgage advisor during the application process.
The government bonus qualifies, and is awardable and payable during the property purchase process and is paid on the closing balance of the account.