resource hub | Help to Buy ISA FAQs - will you benefit?

Help to Buy ISA FAQs - will you benefit?


The Help to Buy ISA has been introduced from today (1st December 2015) and will allow first time buyers to save for their first home whilst getting help from the Government. Here are some FAQs to help you understand more about the scheme.


Who is eligible?


Anyone over the age of 16 who is a first-time buyer or plans to be in the future. This means you can’t own or have previously owned a residential property inside or outside the UK.  


What if I inherited a property, am I still eligible?


No, unfortunately not as you will have had an interest in a residential property.


When do I need to apply?


You can open the ISA from 1st December 2015 until December 2019.


How much will the Government give?


For every £200 you save, you will get £50 from the Government. This is the maximum allowed per month. Essentially they will add 25% tax-free to whatever you have in your ISA (up to a maximum of £12,000) when you spend it on the deposit for your first home.  


But what happens if I can’t afford £200 a month every month?


This is the maximum amount per calendar month, you don’t need to put this much in every single month.


What is the minimum I need to save to get a bonus?


The minimum amount that needs to be saved is £1,600. This will receive a £400 bonus.


Is there a maximum limit on the bonus?


The maximum bonus you can get is £3,000 which is paid for £12,000 or more. You are still allowed to have larger amounts saved, but the maximum bonus will still be £3,000. 


How long do I have to pay into the ISA?


The Government have said the scheme will pay until December 2030 although, the longer you take to build up your bonus, the more risk you face as the Government could change and alter the rules on this.


How long does it take to earn the £3,000 bonus?


Based on the maximum amount that can be saved each month of £200 and taking into account that you open the ISA with the initial £1,000 deposit then it will take just over 4 and half years to save £12,000.


Can I apply for the ISA with my partner?


If your partner is not a first time buyer but you are then you can still open the ISA. If you’re both first time buyers then you can both have the ISA as they are based on individuals, not couples.  


What is the limit on the property I can buy?


The property must cost less than £250,000 (or £450,000 London).


How do I get the bonus?


The Bonus will be transferred through your solicitor who will then use this to complete the purchase of your property.


What if I have other savings already?


You can use other savings too, it doesn’t need to be your sole deposit but the maximum bonus you can receive is £3,000 based on £12,000 saved.


I already have a cash ISA, how will this affect this?


You cannot open a Help to Buy ISA and cash ISA in the same tax year.


How many Help to Buy ISAs am I allowed?


Unlike a cash ISA, you can only have one help to buy ISA but you can transfer it to a different provider if there is a better interest rate available. Remember: Don’t take the money out to transfer it, speak to your new provider for help) 


What if I decide not to buy a property?


If your circumstances change and you decide not to buy a property then you can take your money out of the ISA, tax free and with the interest you’re owed - you just won’t get the Help to Buy bonus.


Does the property I buy need to be in the UK?


Yes, you cannot use the bonus to buy property overseas.


Can I rent out the property?

No, you cannot use the Help to Buy ISA if you plan to rent out the property.