What is a Help to Buy ISA?
A Help to Buy ISA was a government-backed savings account designed to help first-time buyers save for a home deposit. It is now closed to new applicants, but people who already have one can continue saving into it and still claim the government bonus.
Since its launch in 2015, Help to Buy ISAs helped over 500,000 first-time buyers purchase their first home.
Are Help to Buy ISAs Still Available?
Unfortunately, the deadline for securing a Help to Buy ISA was the 30th of November 2019, which means that you can no longer open a new account. However, if you already have one, you can still continue using it.
Existing account holders can continue paying into their ISA until 30 November 2029 and claim the bonus until 30 November 2030.Although new Help to Buy ISAs are no longer available, we’ve put together a guide to explain what Help to Buy schemes are and how they work for those who still have one and want to know more. We’ll also explore alternative options that are available for first-time buyers.
How Much Can You Put in a Help to Buy ISA?
If you already have a Help to Buy ISA and have not yet started saving into it, you can pay an initial deposit of up to £1,200 for the first month, which will also qualify for the 25% boost. After your initial payment, you can 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 something like a Lifetime ISA may be better suited to you.
The minimum you have to save before you can utilise your 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.
What Property Can I Buy With a Help to Buy ISA?
The government bonus will only apply to properties valued up to £250,000 unless the property is London-based, where the cap is set at £450,000.
Can a Couple Use Both of Their Help to Buy ISAs to Buy a Property?
Couples are able to use both of their 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. However, it’s important to remember that the overall property value cap won't increase, so it's worth considering your options together.
Alternatives to Help to Buy ISA
Now that new Help to Buy ISAs aren’t available, it’s worthwhile exploring other options that offer similar benefits. Lifetime ISAs are a great alternative that give first-time buyers another route for saving for their ideal property and also offer a 25% government-funded bonus.
Unlike a Help to Buy ISA, a Lifetime ISA allows you to save up to £4,000 per year and still receive a 25% government bonus. The maximum property value for a first-home purchase through a Lifetime ISA is £450,000.
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 forgo the government bonus and have certain catches, such as postcode catchments to limit who can apply. Doing independent research into these will give you a wider picture of the savings landscape so you can choose the ideal account for you.
Step Onto the Property Ladder With Berkeley Group
Take your first step onto the property ladder with Berkeley Group. With stunning homes available in sought-after locations such as Hertfordshire, London, Surrey, and Berkshire, we offer thoughtfully designed properties perfect for first-time buyers.
Plus, with tailored support and expert guidance, we’ll help make your home-buying journey smooth and stress-free. Find out more about Berkeley Group or get in touch for more information.