HELP FOR FIRST TIME BUYERS: Government’s new Help to Buy ISA

April 10, 2015

The new Help-to-buy ISA initiative, unveiled in Chancellor George Osborne’s budget last month, is aimed at helping first time buyers by assisting them in saving towards a larger deposit. The new initiative will benefit first-time buyers, although it is also possible to open one of these ISAs if you are buying a property with someone who isn’t a first time buyer, though the non first-time buyer will not be able to open one.

Under the scheme, which will launch in Autumn 2015, first time buyers can save up to £200 every month and the Government will add 25% on top of the monthly saving. It is also possible to start off with an initial £1,000 which will have £250 added on top.. The overall minimum amount required to earn a Government contribution is £1,600 (earning a bonus of £400), and the overall maximum

Government contribution is £3,000 (meaning an overall deposit of £12,000 to be saved). The account restrictions on a Help-to-buy ISA differ from a regular cash ISA and there will be a cap of £200 per month deposited into the account (on top of a limit of £1,000 initial deposit).

The Help-to-Buy ISA will be available through banks and building societies and the associated rates will be set by the individual banks.

It should be remembered that you cannot contribute to a cash ISA and a Help to Buy ISA in the sametax year. This means that if you open a new cash ISA after 6 April 2015 (or put money into an existing one) you will not be able to open a Help to Buy ISA when they launch this autumn – instead you will have to wait until the next tax year.

The bonus will be calculated and paid when you buy your first home. You will receive a voucher for the bonus which will be paid straight to your mortgage lender, ensuring that the bonus is only paid upon the purchase of a home. The bonus will only be available on homes worth up to £250,000 (or up to £450,000 in London) and there are no restrictions on buying a new build or second hand home.

For advice please contact the Property Department at Cleaver Fulton Rankin on 028 9024 3141 or info@cfrlaw.co.uk
Please note: The content of this article is for information purposes only and further advice should be sought from a professionaladvisor before any action is taken.