On the 1st of December 2015, the Help to Buy ISA savings account was launched. Which is great news for first-time buyers, who can now earn up to 4% tax-free interest on their savings. On top of this, the Government will pay a 25% bonus when you buy your first home; an offer worth considering.
But trying to find the deal that works best for you can be tough, especially when you’re new to the property market. So how does the Help to Buy ISA work and how can it benefit you?
To begin with, you need to understand what you’re actually looking for. Reassuringly, there are many ways that a potential buyer can start looking to save towards a property, and here, the Help to Buy ISA is the newest scheme to launch on the marketplace.
The Help to Buy ISA is simple to open as it’s the same process of opening a normal cash ISA account, however, there are some differences. So before you apply, it’s best to know what the Help to Buy ISA entails. NatWest have created an infographic that helps cover the basics.
When you are acquainted with the fundamentals of the Help to Buy ISA, you’ll need to check if you qualify, saving you a lot time later on. The Help to Buy ISA states that anyone 16 and over can open an account; reasonable enough. The deal only applies to first-time buyers. And by first-time buyers, we mean anyone who hasn’t previously owned a home or owned any land in the UK or abroad. Another key detail is that you cannot open a Help to Buy ISA and a cash ISA in the same financial year.
Once you determine whether or not you qualify, you can then proceed to open your account. If you are a couple you can both open an account. You will be treated individually, meaning you can save twice as much and double your bonus when buying a house together. As great as this sounds, it’s worth remembering that if one person in the relationship has previously owned a house, they won’t be eligible to open a Help to Buy ISA.
Whether individually or as a couple, as a first-time buyer opening a Help to Buy ISA seems like an obvious answer to the multifaceted problem of buying a property. Even if you already have significant savings, it’s worth considering moving money into a Help to Buy ISA in order to receive the bonus. You could soon see a considerable amount of savings that will eventually go towards your future home. Imagine that.