The help to buy ISA is a government scheme which has been designed to help first time buyers get onto the property ladder by saving up for a deposit for their first home.
Like with any ISA, savings held in a Help to Buy ISA are tax free, however this type of ISA attracts the added bonus of receiving government contributions. With the added bonus, the government will add 25% to your savings, so for every £200 you save you will receive a government bonus of £50.
To be eligible for a Help to Buy ISA you must:
• be aged 16 or over;
• have a valid National Insurance number;
• be a UK resident;
• be a first time buyer, and not own or have previously owned a property anywhere in the world;
• not have another active cash ISA in the same tax year; if you have opened a cash ISA this tax year, you can open a Help to Buy ISA but will have to take additional steps;
• have a purchase price of up to £250,000 (or up to £450,000 in London);
• be your main residence – the property you are purchasing cannot be a second home or a buy to let property;
• be purchased with a mortgage – you can use a help to buy ISA with any mortgage; you are not restricted to a Help to Buy mortgage.
How to claim your bonus
Once a completion date has been agreed, we will advise you to contact your bank/building society with whom the ISA is held and arrange to close the account. Once the account has been closed, your bank/building society will provide you with a closing statement. When you withdraw your funds from the ISA account, it is important to make sure you close your account and get a closing statement. If you withdraw your funds without closing the ISA account and receiving the closing statement you will not be able to claim your bonus. Once you have received your closing statement, then you should provide us with a copy so that we may apply for your bonus. Once your bonus has been applied for and has been approved the bonus payment will be sent to us directly and we will include this payment towards the deposit of your purchase. You will not be required to do anything further in respect of your Help to Buy ISA from this point onwards.
Help to Buy ISA’s are available to open up until the 30th November 2019. After this date you will no longer be able to open a new ISA account; however you will be able to continue to save in existing accounts and all bonuses must be claimed by December 2030.
If you are a First Time Buyer seeking to get onto the property ladder either now or in the near future, then it might be worth having a look into the Help to Buy ISA scheme and opening your ISA now while you can.
As solicitors, it is our responsibility to guide you through the conveyancing transaction and keep you fully updated and informed to ensure transactions are completed quickly and efficiently. Please click here to contact us for advice.
Shantel Dosanjh, Legal Advisor