14 April 2016

How Help to Buy: ISA works

The Help to Buy: ISA launched in the UK on 1 December 2015. It's available to people over 16 who have yet to buy their first residential property, and the Government could add a Bonus to your closing savings balance, up to a total of £3,000.

Those are the headlines – but what are the details about Help to Buy: ISA, and how does it work for buyers in different financial situations, and with different types of purchase?

Is Help to Buy: ISA a permanent thing?

No. it’s a temporary scheme. The Government is planning to close the scheme to new savers on the 30th of November 2019.

Who can get a Help to Buy: ISA?

Eligibilty for the ISA: you must be 16 or over, a UK resident and not own or have never owned a Residential Property in the UK or abroad.

Qualifying criteria for the Bonus: properties in the UK with a purchase price of up to £250,000 (£450,000 within London Boroughs specified within the Scheme Rules). The property must be purchased with a mortgage. This must be your only home and cannot be rented out or used as a second home.

When is the Bonus paid out?

The Bonus could be paid when you purchase your property. It could be paid directly to your solicitor or conveyancer when you purchase your property.

What’s the interest rate?

The interest rates will be set by your provider. No interest is paid on the Bonus, only on your savings balance.

Can you use it with a shared ownership property or an equity loan?

Yes – you can also use a Help to Buy: ISA alongside other Government property shared ownership schemes like Help to Buy: Equity Loan Scheme and Help to Buy: Mortgage Guarantee Scheme.

Can couples get double the Bonus?

Yes, provided you’re both first time buyers. Accounts are limited to one per person, rather than 1 per property. You could get up to £6,000 if you’re in a couple. If a group of friends buys a property together, the bonus could be even greater.

It’s also good news if one person is a first time buyer and the other is not. You can still use the first-time-buyer’s Help to Buy: ISA towards buying a home together.

What are the limits for paying in?

You can pay in up to £1,200 in the calendar month in which you make your initial deposit into the account, and up to £200 each calendar month after that.

Can I have a Help to Buy:ISA and another ISA in the same tax year?

Each tax year, you can only choose one provider to have cash ISAs with. As a Help to Buy ISA is a type of cash ISA you need to consider the Help to Buy: ISA limits that restrict you to putting in £3,400 in the first year and £2,400 per year after that. At Nationwide, you can hold our Help to Buy: ISA product, and use the rest of your annual ISA allowance to save in another of our cash ISA products, within the Nationwide cash ISA wrapper. This means you can make use of the full annual ISA allowance, which this year (2016/2017) is £15,240.

A customer could also make full use of the annual ISA allowance by putting the remainder of their allowance into a stocks & shares ISA.

Can I combine the Bonus with other benefits from my bank?

Yes. The Help to Buy: ISA Bonus comes from the Government, so any benefit from your ISA provider or mortgage provider is separate.

I already hold a Nationwide Save to Buy ISA, can I open a Help to Buy: ISA?

Existing Save to Buy ISA customers who are eligible for a Help to Buy: ISA could transfer their savings over if they choose to (up to the maximum deposit limits). And they also have the option to keep both products open and mix and match how much they save in each one, subject to the account limits.

Download the Government’s outline of the Help to Buy ISA scheme (PDF).

Find out more

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If you're a first time buyer, find out how a Nationwide Help to Buy: ISA could make a difference.

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