As a recent first time buyer herself, Trainee Solicitor Emily Hearn has been researching the Help to Buy ISA scheme.
"I purchased my first house in November 2018. It was a surreal moment knowing I was soon to be a home owner. What was even more exciting was receiving the government incentive for first time buyers under the Help to Buy ISA Scheme. My closing statement was emailed almost immediately by my ISA provider which I then swiftly sent to my solicitor for their application. I felt pretty chuffed until I moved in and it dawned on me that I’d have to buy essentials such as carpets and curtains!"
Help to Buy ISAs are a type of ISA designed to help first-time buyers save up a deposit for their home. The government will add 25% to your savings, up to a maximum of £3,000 on savings of £12,000.
Who is a first time buyer?
To qualify you must be classified as a first-time buyer and not own a property anywhere in the world.
- You must be aged 16 or over
- You can use a Help to Buy ISA with any mortgage
- You can’t use a Help to Buy ISA if you’re going to rent out the property
- You can’t use a Help to Buy ISA on an overseas property
What type of house can I claim my bonus for?
You can use it to buy any home worth up to £250,000 (or up to £450,000 in London). The property you are buying must be mortgaged in order to be eligible for the government bonus.
The minimum amount you need to save to qualify for a government bonus is £1,600 (which gives you a £400 bonus).
Can more than one first time buyer both have a Help to Buy ISA?
Help to Buy ISAs are available to each first-time buyer, not each home. You are not prevented from claiming your bonus if the other person is not a first-time buyer.
Can I open a new Help to Buy ISA?
New applications for a Help to Buy ISA are no longer available, but if you opened your Help to Buy ISA before 30 November 2019 (being the deadline when new ISA accounts could be opened), then you can keep saving into your account and earn a government bonus towards your first home in the normal way.
Please note: Help to Buy ISA’s were replaced by Lifetime ISA’s in November 2019 which are not covered here.
What does my conveyancer do?
Your solicitor or conveyancer claims the bonus in anticipation of the completion date after exchange of contracts. The bonus is applied for after you have closed your account and a closing statement has been issued by the ISA provider. You should not close your Help to Buy: ISA unless you are confident that you are about to buy a home (and have either preferably exchanged contracts or your solicitor/ conveyancer requests suggests you do so in readiness)
The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s/estate agent’s fees or any other indirect costs associated with buying a home.
The bonus money is paid to your solicitor, and can take up to 5 working days to receive the bonus. The bonus money is put towards the purchase price.
How much will it cost?
Your Solicitor or Conveyancer can only charge a fee of £50 + VAT for dealing with the Help to Buy ISA and claiming any bonus.