Help to Buy ISA Vital for first time buyers, says Nationwide

The Nationwide Building Society is keen to see Help to Buy ISAs extended by the government as it describes the product as vital in helping people buy their first home.

This is even though Nationwide has launched a new Lifetime ISA product. They believe in the success of the Help to Buy ISA over the years, its effectiveness and simplicity. Not forgetting that Nationwide is responsible for opening one in seven new such accounts.

The Help to Buy ISA (H2B ISA) launched in 2015 and is the governments flagship scheme that gives help to first time buyers.

The new lifetime ISA allows savers to earn a larger bonus than the H2B ISA, over a longer term. Savers can deposit up to £4000 annually until they reach the age of 50 years. The 25% bonus they receive from the government is added to the savings with a maximum of £1,000 each year.

As the product is an ISA, the deposits paid in will count towards the individuals annual ISA limit of £20,000 for the 2017 to 2018 tax year.

The downside of the of the Lifetime ISA is that there are penalties if the saver wishes to withdraw their money early which is why Nationwide says that the H2B ISA is so important.

Nationwide said, “The support offered to first time buyers through the H2B ISA is vital, particularly during a period of high inflation and rising house prices, where any assistance for those saving for a deposit is a major boon.”

Currently the H2B ISA allows monthly deposits of no more than £200 per month, Nationwide would however like to see this limit raised to allow savers who don’t live in London the chance to buy property over £250,000, the maximum allowed under the scheme.

Chris Rhodes, executive director for products and propositions at Nationwide said, “We believe the existing Help to Buy scheme is the most effective option for first-time buyers due to its benefits, simplicity and proven success. It should be extended and enhanced, building on a product which is not only fit for purpose but also helping move the dial on getting people onto the housing ladder during a difficult time for savers”.