The Help to Buy ISA was very much pushed as a leading pledge of the May 2015 elections, proving to be one of the most popular moves by the Government yet. From December 1st 2015 first time buyers began looking forward to generous boosts to their savings of 25% and here we take a look a just how this tempting savings account will work.
First time buyers rejoice: Up to £3,000 towards your new home
Saving up for a deposit can be tough going, with the average starter home price of £211,000 requiring the now general industry minimum of 10%, or roughly, £21,100 This eye-watering lump sum has proven impossible to achieve for many, with financial experts warning of now epidemic levels of would be first time buyers who simply can’t get on the property ladder.
To tackle what is arguably a national crisis the Help to Buy ISA aims to provide for an essential boost for those saving for a deposit. This account, available from all major high street banks, will allow for an initial deposit, with account holders able to gradually save up month by month. Here’s a summary of the basics for those interested in up taking this offer:
– Account applicants must be first time buyers, aged 16 and over, and be resident to the UK;
– Applicants must not have owned property previously, nor had any interest in land in or outside of the UK;
– Account holders will be able to save up to £12,000 in total;
– A maximum £3,000 boost will be paid once a property is found and the sale is processed;
– An initial deposit of £1,600 can be paid, followed by maximum monthly credits of £200;
– A minimum of £1,600 must be saved to qualify for a minimum government contribution of £400;
– Additional interest is paid on top of any governmental contributions, with rates varying from lender to lender;
– Accounts can only be held in one name;
– You can save into both a regular ISA, as well as a Help to Buy ISA within the same tax year, but you can’t exceed your ISA allowance between the two (which for 2015/2016 is £15,240);
– You can also transfer in other ISA balances;
– The maximum property price a bonus will paid upon is £450,000 in London, and £250,000 for properties elsewhere.
Will there be a revolution for the Bank of Mum and Dad?
The Bank of Mum and Dad has traditionally been turned to for an essential foot up and onto the property ladder, with more than half of first time buyers having reportedly done so in 2014. This was notable because it made for a record year for those seeking help from their parents, with industry experts noting that, despite the Government’s various first time buyer focused schemes, such purchasers were struggling now more than ever.
Nevertheless the Help to Buy ISA is promising to lift at least part of this burden from many parents’ shoulders, even if the complete revolution will look set to wait for another day.
If you need any help with your personal finances contact our professional team today.
Remember your home may be at risk if you do not keep up with the repayments for a loan or mortgage secured on your property.
Information is based on our current understanding of taxation legislation and regulations. Any levels and bases of, and reliefs from, taxation are subject to change.