Announced in the Chancellor’s Budget in March 2015, the Government will now contribute towards the cost of buying your first home if you save into a new type of ISA.
The new Help to Buy ISA scheme, which launched on 1st of December 2015, means you’ll be able to save up to £200 a month into your account and the government will then top this amount up by 25%.
So, if you manage to save the maximum each month, the government will be topping up your account with £50 for every £200 saved. The government bonus will be capped at a total of £3,000 on £12,000 of savings. The minimum you need to have saved to get the bonus is £1,600 (so a £400 bonus).
You can also save an additional £1,000 when you first open your Help to Buy ISA account, meaning you can save £1,200 in the first month, and have it topped up with £300.
The Help to Buy ISA is available through banks and building societies, and works the same as a regular cash ISA. This means you can build up tax-free savings, and earn interest as well as getting the bonus at the end.
The government bonus can only be put towards a first home located in the UK with a purchase value of less than £450,000 or less in London and £250,000 or less in all other parts of the UK. Fortunately, many of our properties aimed at first time buyers fall within this bracket.