Help to Buy ISA | Berkeley Insights | Berkeley Group

Help With the Help to Buy ISA

Since its launch back in 2013, Help to Buy ISAs have successfully given over 225,000 first time buyers the opportunity to get onto the property ladder with additional financial assistance from the government. However, the deadline for securing one of these ISAs is fast approaching, with the last day possible to do so set for 30 November 2019, so we've put together a refresher which highlights some key benefits, as well as busting some myths, to help you figure out whether Help to Buy is the right thing for you so you can beat the deadline in plenty of time.

How much can you save?

You can start your Help to Buy ISA off with an initial deposit of up to £1,200 for the first month, which will also qualify for the 25% boost, then follow it up with monthly deposits of up to £200. If you'd be able to save more than this per month, or would rather make one large deposit over lots of smaller ones, then there may be other options that would suit you better.

The minimum you have to save before you can utilise you Help to Buy ISA is £1,600, giving you a £400 top up, with an upper savings limit of £12,000 for a £3,000 bonus. Although this is less than the standard ISA limit of £20,000, the 25% government bonus is considerably more than what you would earn in interest with other savings accounts and is very useful in securing your first property.

Finding the right property for you

The government bonus will only apply to houses under £250,000, unless the property is London based where the cap is set at £450,000. This will potentially dictate the potential location of your property as well as its size, but for your first property it's a good idea to find something that's manageable before diving into larger properties.

Getting together

Couples can both have their own individual Help to Buy ISAs and capitalise on the separate bonuses then pool them together, meaning you can effectively double the amount of funding the government will provide towards your home - but the overall property value cap won't increase any higher, so its worth considering your options together.

Looking ahead

Investing into property can give you an element of stability for the future, removing the worry around rent increases and landlords selling the property from underneath you. If you find the right property for you which happens to have a spare room, renting this out to assist with paying the mortgage can also be a good way of making the repayments more manageable.

Any alternatives?

The introduction of the Lifetime ISA gives first time buyers another route to go down for saving for their ideal property which also offers a 25% government funded bonus. As mentioned before, if the saving structure of the Help to Buy ISA is too restrictive then the Lifetime ISA gives you more flexibility in when you can make deposits and isn't tied to a monthly limit. However, there are only a handful of current offerings out there at the moment so it's worth doing your research into these separately.

Some specific regional banks and building societies are also offering their own savings accounts specialised for first time buyers. These mainly feature a higher initial interest rate but forego the government bonus and have certain catches such as postcode catchments to limit who can apply for these. As with the Lifetime ISA, doing independent research into these will give you a wider picture of the savings landscape so you can choose the ideal account for you.

To find out more about our current properties available to purchase with Help to Buy, please visit our Help to Buy page.