Help to Buy: ISA

What is a Help to Buy ISA?

To help first-time buyers save a deposit, the government offers Help to Buy ISA accounts, whereby money deposited into the account receives a government boost of 25%, tax-free – restrictions apply. As in all savings accounts, interest is also added to the balance at the rate set by your chosen bank.

Who is eligible for a Help to Buy ISA?

To apply for a Help to Buy ISA, you must be:

• Aged 16 or over
• A resident in the UK for tax purposes
• Be a first-time buyer
• Buying a primary residence (i.e. not an investor)

A person can only open one Help to Buy ISA in their lifetime and the money saved can be used on property purchases up to £450,000 inside Greater London and £250,000 outside.

What if I am saving for a deposit with my partner or friend?

If you’re purchasing with another person, you can both save in the same ISA. Each of you will benefit from the government bonus, meaning the amount you receive will be doubled.

What financial requirements are there for a Help to Buy ISA?

The minimum deposit to open an account is £1 and you can save up to £200 per month, with an additional allowance of £1,000 in the first calendar month.

Are there limitations for receiving the government bonus?

To qualify for the government bonus, the minimum saving is £1,600, which will benefit from a £400 top-up. The maximum bonus is £3,000, which is payable on balances of £12,000 and above. As outlined previously, these limitations apply to each person individually.  

Who offers Help to Buy ISAs?

Most banks and building societies offer Help to Buy ISAs. It’s worth comparing the options on a site such as Money Supermarket to find the best interest rate. If your chosen ISAs interest rates change, it’s possible to transfer the balance in an existing account to a different provider.

How do I claim the bonus?

Once you’ve saved and are close to offering, instruct your solicitor to apply for the government bonus. The money is received on completion, so cannot be contributed towards the deposit paid on exchange.

For more information on Help to Buy and government schemes available to you, take a look at our articles on Help to Buy Equity Loans and Shared Ownership. If you currently have a Help to Buy ISA and are looking to buy your first property, here are our top properties for sale under £450,000.