Houses in the UK are very expensive. The go for as much as £450,000. That is much money for most people in the UK to raise. Mortgage lenders do help people in financing house buying. However, there is a limit to what the lenders can do. The government came up with a plan to help prospective new home owners to purchase houses. The government’s brainchild is the “Help to buy ISA” scheme. “Help to buy ISA” is a property purchase scheme where the government offers a bonus on house deposit. The prospective home owner has to save to buy ISA. The bonus is 25% of the amount of money you have saved at the time of buying.
Individuals applying for ISA are required to place a deposit of £ 1000 in a “Help to buy ISA” account. This money can be deposited in Barclays, Lloyds Banking Group, Nationwide, Santander, and Virgin Money. These banks have signed up to offer “Help to buy ISA” scheme. The deposit should be followed by a monthly savings of a maximum of £ 200 a month. At this rate, you can be ready for the full government bonus of £ 3000 in five years. £ 3000 is the maximum you can get from the government. The minimum is £ 1600. Getting the full government bonus, given that the bonus is 25% of the total saving, means that you must have saved £ 12000. To qualify for ISA, you must have at least £ 6400 in your “Help to buy ISA” account.
“Help to buy ISA” is only available to first time home owners. Previous homeowners do not qualify for this bonus. You can only have one “Help to buy ISA” account. “Help to buy ISA” is treated as an individual incentive rather than a household affair. This means that every spouse is entitled to an ISA account. To make proper use of ISA, you and your spouse can open an ISA account. If each of you saves £ 12000, you will be entitled to a total of £ 6000 government bonus, with each of you getting. That is enough money to place as a deposit for a house.
You only get “Help to buy ISA” after you have completed conveyance and you are ready to make house payments. The money cannot be used to cover conveyance fees. You can also never withdraw it directly. Upon completion of conveyance, your solicitor applies for ISA. The money is transferred to the seller.
Other government savings schemes include Cash ISA, and Stocks and Shares ISA. An individual with “Help to buy ISA” cannot have a Cash ISA account in the same tax year. You have to close one of the accounts before you open the other. You are allowed to transfer funds from your Cash ISA to your “Help to buy ISA” account. The benefit of Cash ISA is the £ 1000 tax-free interest that is given to Cash ISA account holders. You can have “Help to buy ISA” account alongside Stocks and Shares ISA accounts.