Budget 2015: Help-to-Buy ISA explained

Aspiring homeowners were given a boost today when George Osborne pledged to contribute up to £6,000 towards their deposits.

In his Budget speech, the chancellor unveiled the Help-to-Buy ISA, which is only open to first-time buyers from Autumn 2015.

For every £200 a buyer deposits in the ISA, the government will top it up with a further £50, essentially offering a 25% savings top up.

The bonus is capped at £3,000, which means you need to deposit £12,000 to get the maximum contribution from the government, taking you to £15,000 in total.

However, the Help-to-Buy ISA is available to every applicant, which means joint homebuyers could benefit to the tune of £6,000.

According to the Treasury's website, the ISA will be available for four years, but once you have opened an account there's no limit on how you long you can save for.

The bonus will be available on home purchases of up to £450,000 in London and up to £250,000 outside London

The accounts will be easily available through banks and building societies but, annoyingly, they are quite restrictive when it comes to paying money in.

You need to make an initial deposit of £1,000 when you open the account. Thereafter, you aren't allowed to pay in more than £200 each month.

That means it'll take at least four-and-a-half years to save the £12,000 needed to qualify for the full £3,000 government bonus - quite frustrating for those able to save faster (and who knows what house prices might be like at that point).

All things considered, the Help-to-Buy ISA is a welcome boost to buyers unable to save enough for a deposit, but it's not quite as impressive as it first sounds.

Read more:
Budget 2015: a preview

Budget 2015 predictions

Inheriting ISAs: what you need to know