The government’s Help To Buy scheme has helped thousands of people get their foot on the property ladder, but the scheme is soon set to end.
Many lenders require a substantial deposit for their mortgage products. The amounts needed are often difficult to raise for many first time buyers.
The Help to Buy scheme helps first time buyers raise a deposit by boosting savings by 25% through a special ISA.
Between 1 December 2015 and 31 December 2018, a total of 286,604 bonuses were claimed. The bad news is that the clock is ticking to open one.
The deadline to open a Help to Buy ISA is 30 November 2019. Help to Buy ISA account holders, can, however, continue saving into their account until 30 November 2029 when accounts will close to additional contributions. The government bonus must be claimed by 1 December 2030.
How does Help To Buy work? The basics:
- Choose a Help to Buy ISA from a range of banks and building societies and open an account.
- You will need to have saved at least £1,600 in your Help to Buy ISA before you can claim the minimum government bonus of £400.
- The Help to Buy Scheme will contribute up to a maximum of £3,000 per person.
- When you buy your first home your solicitor will apply for your government bonus, once you tell your bank or building society that you are closing your Help To Buy ISA.
Step by Step Guide:
Open your account – The accounts are available to each first time buyer, not each household. This means that if you are planning to buy with someone (i.e. a partner), you could receive a government bonus of up to £6,000 towards your first home. In your first month of opening your account you can make an initial deposit of up to £1,000 but you can open your account with just £1.
Saving – Once your account is open and you have made your first deposit, you can then save up to £200 a month into your ISA.
Bonus – When you are close to buying your first home, you will then need to instruct your solicitor to apply for your government bonus. Once they receive that bonus, it will be added to the money you are putting towards your first home.
To qualify for the Help To Buy scheme:
To qualify for the government Help To Buy bonus, the property you are buying must:
- Be in the UK
- Be bought with a mortgage
- Have a purchase price of up to £250,000 (£450,000 in London)
- Be the only home you own
- Be where you intend to live
Remember Remember the end of November. Open your account before you miss out!