Help to Buy ISA – Opening doors for First Time Buyers

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If you are finding it difficult to raise a deposit for your first home, then your luck may be about to change. In the final budget before the general election, Chancellor George Osborne, announced the Help to Buy ISA, aimed at assisting first time buyers secure funds for their new home. This new approach mirrors other existing schemes and changes made over the last few years and show a positive outlook towards the future of the housing market.

Under the new Help to Buy ISA, you can save up to £200 a month towards your first home and the government will then boost your savings by 25%. That’s a £50 bonus for every £200 you save. The minimum bonus you can receive is £400, if you can save £1,600. The maximum is £3,000 if you can save £12,000.

New accounts will be available for 4 years but once opened, there’s no limit on how long you can save for. Buyers can initially deposit £1,000 when the account is opened, as well as up to £200 normal monthly savings. If a first time buyer is able to start their ISA with the maximum £1,000 deposit and can save £200 per month, they could have enough deposit to buy a £125,000 starter home within 21 months. If two people are buying together and can each save the same amount they could have enough money saved to be in their new home within a year.

With this scheme being introduced in Autumn this year, there’s no surprise house builders are feeling optimistic about what is to come. Peter Ward, managing director of Beverley-based Peter Ward Homes, has expressed his views on the government opening doors to first time buyers, who are struggling to source sufficient funds.

Peter said: “ The new Help to Buy ISA now means first time buyers have that extra support and encouragement to save towards their dream home. By saving £200 a month, breaking it down means you are effectively having to save less than £7 a day with a £50 bonus at the end of every month you save. With this new proposal in place and the reduced stamp duty rates, people can take advantage of the help provided and see they can buy their perfect home.”

The Help to Buy ISA will be available through banks and building societies. Interest rates will be set, differing just as with regular cash ISAs. This means you will earn interest like a normal cash ISA as well as getting the bonus at the end.

So if you’re a first time buyer and could benefit from an added bonus, start saving and you could be moving!

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