The Help to Buy ISA launched onto the savings scene in 2015, after they were announced in the 2015 Budget. Money saved in this account can be boosted with a 25 percent government bonus – however the deadline for opening this type of account was last November.
The Help to Buy ISA differs to the Lifetime ISA – which is another savings account which offers a 25 percent government bonus.
While it’s possible to hold both types of account, the government bonus may only be claimed on one.
There is a maximum government bonus of £3,000 for the Help to Buy ISA.
A person can save up to £200 per month into this type of account.
In order to kickstart the account, the saver can deposit a lump sum of up to £1,200 in their account in the first month.
The minimum government bonus for a Help to Buy ISA is £400, and this means that a person needs to have saved at least £1,600 in the account before they can claim the 25 percent.
In order to get the maximum bonus, £12,000 must have been saved in the Help to Buy ISA.
The bonus is not immediately received by the saver after the money is put into the account.
Instead, when the first-time buyer is close to purchasing their first home, they will need to instruct their solicitor or conveyancer to apply for the government bonus.
There are a number of eligibility rules to qualify for the government bonus.
So, while it may be possible for a saver to have opened and saved into a Help to Buy ISA, they’ll need to be aware that there are further conditions to fulfil in order to get the government bonus.
This includes the property having a purchase price of up to £250,000 – or up to £450,000 in London.