Savers now have less than five months to open a help-to-buy ISA before the scheme is withdrawn for new entrants on 30 November 2019.
If you open one before this date, you can keep saving into it, but you must claim the Government bonus by 1 December 2030.
This could provide a much-needed boost to your savings for a first home, offering a Government bonus of up to £3,000.
In the three years since the launch of the scheme, HMRC figures show it supported 218,371 property completions, with an average bonus value of £899.
It’s not the only scheme available for home ownership, however, so it’s worth doing your research and comparing it to the alternatives before you sign up.
Help-to-buy ISA explained
Once you open a help-to-buy ISA, you can save up to a maximum of £12,000 and get a 25% bonus from the Government for the purchase of a first home.
Your first payment into the account can be up to £1,200, after which you can pay up to £200 a month.
You’ll need to have at least £1,600 saved up in order to qualify for the bonus.
Buying a home
You can use your savings in a help-to-buy ISA to buy a home worth up to £250,000 (or £450,000 in London).
This is only for first-time buyers, so you can’t get the bonus if you already have a property, whether that’s in the UK or anywhere else in the world. It also has to be somewhere you intend to live, so you can’t buy it to rent out.
If you’re buying with your partner, they can also get a help-to-buy ISA and put their savings towards it – potentially doubling your deposit for a mortgage.
When should you claim it?
When you secure a mortgage to buy your property, your solicitor or conveyancer will need to apply for the 25% bonus.
This should be claimed once it is certain the transaction will go ahead – waiting until after the purchase is completed will be too late.
The bonus will be added towards your overall deposit on the property.
Help-to-buy vs lifetime ISA
You can save up to £4,000 a year in a lifetime ISA, and receive a 25% bonus of up to £1,000.
This can be used for the purchase of a first home, or to supplement your retirement savings after the age of 60.
There are other rules that make the lifetime ISA different to help-to-buy. See our comparison chart below for some of the key points:
25% of savings
25% of savings
How much can you save in a year?
£3,400 in the first year, then £2,400
When is the bonus paid?
When you buy a home
When can you use it to buy a home?
Once you’ve saved at least £1,600
At least 12 months after you open the account
What’s the maximum bonus?
£32,000 (if you save the maximum amount for 32 years)
Any withdrawal penalties?
No – you can withdraw the money any time but you won’t receive the bonus.
Yes – 25% of what you take out if it’s not to buy a home and you’re under 60.
Anyone aged 16 or over can open one.
You must be 18 or over, and under 40, to open an account.
You can save in it until age 50.