The Help to Buy ISA has been helping first-time buyers save for a mortgage deposit since 2015. For every penny you save in the ISA, the government will give you a 25% bonus (up to £3,000) towards your first home.
£3,000 could certainly go a long way when saving to buy your first home. However, as of 30th November 2019, the government will replace Help to Buy ISAs with the already existing Lifetime ISA. With this in mind, here’s why you might consider investing before the deadline.
Reasons to open a Help to Buy ISA before the deadline
You can open a Help to Buy ISA with as little as £1
Money Saving Expert, Martin Lewis, has recently stressed this, but it might be worth opening a Help to Buy ISA with just £1. With the scheme paying out until 1st December 2030, you’ll still have plenty of time to start investing each month.
You can withdraw the money whenever you like
Just like a regular ISA, you can withdraw the money whenever you like and use it wherever you like, but you won’t receive the 25% bonus. It will, however, be tax-free and eligible for any interest, so you don’t have to worry about your plans changing.
If you’re buying with your partner, you can both open one
Just like £3,000 could help out with a mortgage deposit, £6,000 could go even further! If you’re planning to buy your first home with your partner, you’ll both be able to open a Help to Buy ISA and double-up on your earnings.
You WILL be able to rent your property out if your circumstances change
Initially, the government were set against this. However, after some reconsideration, if your circumstances change further down the line, you will be able to rent your property out if you’ve used a Help to Buy ISA towards it.
Is there a catch?
There’s no catch to the Help to Buy ISA. After all, it was set up by the government to help more young people get on the property ladder. However, it’s worth noting that you cannot use the money towards your house deposit. This is because any interest or bonus earnings will be paid after the house purchase has been confirmed, so you’ll only be able to use it towards a mortgage deposit or anything thereafter – and not your home exchange deposit.
You’ll also need a solicitor to help you apply for the 25% bonus. Your Help to Buy ISA provider will transfer the 25% bonus to your solicitor, who will then be able to transfer it on to you. But don’t worry, this is a simple process that our solicitors here at ET Law are happy to assist with.
Applying for a Help to Buy ISA
If you’re ready to take the next step, take a look at our guide on how to apply for a Help to Buy ISA. If you’re unsure about anything, from the process to the ins and outs of the scheme, get in touch with our first-time buyer solicitors.