The Help to Buy ISA scheme assists those saving for a deposit on their first home. Through this scheme individuals can potentially walk away with a £3,000 government bonus and couples can pool their separate ISAs together for a total bonus of up to £6,000. According to the Government over 225,000 bonuses have been paid since 2013 and first-time buyers that employ the scheme are able to jump on the property ladder three years earlier than those who abstain from taking part in the same. But you must act quickly if looking to opt into this scheme as its deadline of 30th November 2019 is fast approaching.
In the first month of the scheme individuals can deposit a lump sum of up to £1,200 and every month thereafter can deposit up to £200 into their special savings account. Unfortunately the bonus that is earned cannot be utilised for the deposit when buyers exchange, nor can it be used to pay off the fees for solicitors and/or agents. The scheme does however allow you to save at your own pace and will remain as such to existing savers until the final deadline to claim in December 2030. There are many other benefits to the scheme, the interest rates are low, the interest you make is tax-free and for every pound you save the Government furnishes an extra 25 pence. Moreover, if you have a change of heart, you always have the option to withdraw your money at any time, but you will consequently have to relinquish the bonus payment.
Following the aforementioned deadline, the scheme will be replaced by the Lifetime ISA (“Lisa”) a similar scheme for first-time buyers, those saving for retirement and stocks and shares investors. Savers will be able to deposit up to £4,000 a year into a Lisa and can save lump sums instead of a monthly amount. However those opting into the Lisa could be faced with an aggressive exit penalty if they withdraw the funds for anything other than retirement, a first home, or as a result of a terminal illness.
It’s important to consider which scheme would be most beneficial to you and your circumstances and to take independent financial advice.
If you would like to discuss this further or if require any additional property advice as a first time buyer or need help on a conveyancing matter, please contact rhw’s residential team on 01483 302000 or email firstname.lastname@example.org
Mekael Rahman – rhw Solicitors llp