Help to Buy ISA
An Individual Savings Account or ISA is a great way to save up the money that you work so hard for but they only go so far when you are trying to turn your income into enough money to buy a house. A new type of ISA is designed specifically to help you buy a house.
The Help To Buy ISA is government-sponsored type of savings account meant to help people get a house that they want. Want to know more? Let’s take a look.
Help To Buy ISAs are savings accounts that you contribute to regularly. For every contribution that you make, the government will match 25% of. That means you are essentially getting free money. The limit for the government matching is 3,000 pounds, which means the maximum you can contribute with matching is 12,000 pounds.
In order to start an account, you will have to make a deposit into the ISA. The maximum deposit you can start with is 1,000 pounds. Your initial deposit is eligible for the match 25%. That means if you maximize your initial deposit, you are getting a great amount of assistance just at the start. And that initial investment builds from there.
It is important to note that you do not get your government bonus money until you buy your house. That means there will be no interest on your government contribution to your home fund. However, this means that your final government contribution will be based off how much you have saved AND the interest that has built up.
Save to Buy ISA
To qualify for the government assistance, you will need to be buying your first home and over the age of 16. For those that live in London, the house has to be less than 450,000 pounds while a home elsewhere must be under 250,000 pounds. Any property that you own both in the UK and abroad will invalidate your ability to get this type of assistance.
You may not open a cash ISA and a Help To Buy ISA in the same year. However, you can transfer a new cash ISA into a Help To Buy account.
Help To Buy ISA cannot be used to purchase property overseas. You also cannot use a Help To Buy ISA if you intend to rent the property out. A limit of 1 Help To Buy per person has been established by the government.
What this means is that if you are buying a house with a significant other or friend, you can each have a Help To Buy ISA account. With two ISA accounts you can double your down payment for a new house, making your overall mortgage payments lower.
Apply for your government assistance bonus before completion on a house offer. Simply have your solicitor on conveyancer apply as soon as you have acceptance from the seller. This will ensure that you have the money to make the down payment.
The exact account specifications are set down by each financial institution. That includes the interest rate for your savings account. It is advised that you spend time to read about accounts at different financial institutions. By doing so you will ensure that you are getting the highest interest rate with the lowest fees.
It is possible to switch your Help To Buy ISA between different financial institutions in order to get the best deal possible as time changes. Moving your Help To Buy ISA is held to the same standards as a traditional ISA.
You can claim your ISA before December 2030 and must set up your account before 30 November 2019. New savers will not be able to open account after that date but those with existing accounts can continue to save until December 2030.
Buying a house is a major step in life and an expensive one too. Anything that you can do to prepare yourself to buy a house can be very beneficial. Start saving today with a Help To Buy ISA and you will be on track to being a first-time home owner. Have any tips from your Help To Buy ISA experience? Let others know in the comments below.