Saving for Your First Home with a Help to Buy ISA

With the Help to Buy ISA, saving for your first home is made easier as you can receive a government bonus based on the amount of money you save yourself.

The government will top up your home deposit savings by 25%. For every £200 you save, you will receive £50 in a bonus. The maximum amount you can receive from the government is £3000.

How to get started with a Help to Buy ISA

You can open a Help to Buy ISA with a range of banks, building societies and credit unions, so you may be able to keep your savings with your current bank if you want to.

The ISAs are available to individual first-time buyers. If you are looking to buy a house with your partner, you are both eligible to open an account and to boost your combined government bonus to £6000.

Saving in your ISA and boosting your bonus

In your first month you can deposit a lump sum of up to £1200 into your ISA, but in following months you can only save up to £200 per month.

This amount does not rollover, so if you only pay £100 in one month you won’t be able to put £300 in the following month. Your £200 monthly allowance is by calendar month.

As the minimum government bonus is £400, you need to save at least £1600 in your Help to Buy ISA before you can claim. To receive the maximum bonus of £3000, you will need to have saved £12000.

To calculate how much of a government bonus you are currently eligible for, the Help to Buy ISA calculator can work it out for you.

Claiming your bonus when you buy your home

If you intend on withdrawing all the money from your Help to Buy ISA for the purchase of your home, you must inform your ISA manager. Once you have told them, they will close your account and provide you with a closing statement.

You need your closing statement to be able to claim your bonus, so it is important to take this step before withdrawing your money from the account.

Your government bonus is claimed by your solicitor or conveyancer, and you will need to instruct them to request it when you are close to buying your home.

When the bonus is received, your solicitor or conveyancer will add it to the money you are putting towards your property as it must be included with the funds consolidated at the completion of the transaction.

The money you earn in your government bonus cannot be used for the deposit due at the exchange of contracts, for solicitor’s or estate agent’s fees, or on any other costs associated with buying a home.

Are you eligible for a Help to Buy ISA?

To open a Help to Buy ISA, and to claim the government bonus, there are certain criteria which you must meet.

For the Help to Buy ISA, the conditions are that you:

  • Are 16 years old or over
  • Have a valid National Insurance number
  • Are a UK resident
  • Are a first-time buyer, and not own a property anywhere in the world
  • Do not have another active cash ISA in the same tax year

If you do have another active cash ISA, you are still able to open a Help to Buy ISA but you must move all money out of your original ISA first. You can transfer up to £1200 into your Help to Buy ISA in the first month of opening the account.

To apply for the government bonus on your savings, the property you are buying must:

  • Be based in the UK
  • Have a purchase price of up to £250,000, or up to £450,000 in London
  • Be the only home you will own
  • Be where you intend on living
  • Be purchased with a mortgage

Where you can open your Help to Buy ISA

There is a comprehensive list of all banks, building societies and credit unions who provide a Help to Buy ISA on the government website.

You will also find information on how to set up the account, whether that is online, in branch, over the telephone, or by post, allowing you to pick the best option for you.

Let Caversham Solicitors guide you with your Help to Buy ISA

Buying your first home is an exciting but daunting process. Caversham Solicitors can help you with guidance and advice on every aspect of your house hunt, including managing your Help to Buy ISA and claiming your government bonus.

Speak to our team about your ISA and buying a property by calling us on 0800 085 5575