Can a Help to Buy ISA help you buy a home?
Saving for your first home can take a while. Rising house prices, especially in London, mean the deposit required can be pretty big. So can the new Help to Buy ISA get you on the property ladder any faster?
Launched on 1 December, the Help to Buy ISA is a new scheme designed to give a big bonus to the savings of first-time buyers. There's potentially a £3,000 bonus available, which can go a long way to boosting your savings pot.
There are conditions attached though, so to work out if it's right for you we've produced a quick Q&A.
Who can get a Help to Buy ISA?
Anyone who doesn't own a property can open a Help to Buy ISA. You need to be over 16 and a UK resident. It's one account per first-time buyer, which means two first time buyers who plan to buy together can each save into their own Help to Buy ISA.
How much can you save in a Help to Buy ISA?
When you open an account, you can pay in a maximum of £1,200. After that you can make deposits of £200 a month.
Where can you get a Help to Buy ISA?
Many banks and building societies will be offering a Help to Buy ISA.
How much money will you get?
On top of any tax-free interest you earn, the government will top up your savings by 25%.
When can you get the bonus money?
If you save the maximum of £12,000, you'll receive a bonus of £3,000, though the quickest you could save this amount is just under four and a half years.
The minimum is £400, which would require £1,600 to be deposited but could be saved in just three months.
You receive the bonus when you buy your first home. However, you can't then rent the property out after you buy it.
Where can you spend the money?
You can only spend the money on the deposit for your first home. If you don't buy a property, you won't get the bonus.
You also don't get it directly. Instead it's arranged for by your solicitor who adds it to your deposit.
There's also a cap of £250,000 for the property's value, rising to £450,000 in London.
What if you already have an ISA?
You can't pay money into more than one ISA in the same tax year. This means if you've already deposited money into an ISA since 6 April you'll have to wait until April 2016 to open a Help to Buy ISA.
For even more information, read our full guide to Help to Buy ISAs
This article is provided by the Money Advice Service.
