The government’s Help to Buy Individual Savings Account (ISA) is now live, and will allow first-time buyers to save into it with the government adding money to it.
Just like normal ISAs, Help to Buy ISAs are tax-free accounts, which first-time buyers save money into in order to make a deposit on a home, earning interest on their savings.
Users will be able to put up to £200 into the account each month, up until a total limit of £12,000 has been saved.
The government will add 25 per cent to the sum saved up, up to a maximum of £3,000.
This means if a single person saves £12,000, the government’s contribution will result in a total of £15,000 saved for a deposit. For couples they can receive as much as £6,000 from the government.
The Office for National Statistics (ONS) says the average house price for first-time buyers is £216,000 currently, meaning the government bonus can be worth a quarter of 5 per cent deposits.
People can open an account if they are aged 16 or over and are a first-time buyer. An account can be opened between 1 December 2015 and 30 November 2019. In order to qualify for the government bonus, you need to buy a house by 2030.
The ISA is particularly beneficial due to the difficulty many home buyers have affording the deposit for a house.
“Mortgage affordability is an issue, but the real hurdle is the deposit for most people, especially when they are renting in areas where that is expensive,” said Andrew Montlake, of Coreco, the mortgage brokers. “Anything that can help towards the deposit is a good thing.”
There are currently 14 organisations signed up to offering the new ISA account. These are: Barclays, Halifax, HSBC, Lloyds, Nationwide, NatWest, Santander, Aldermore, Bank of Scotland, Clydesdale Bank, Newcastle building society, Ulster North, Virgin Money and Yorkshire Bank.