Absolutely. (If, of course, you’re a first-time buyer).

The headlines are:

  • 25% bonus added by the Government at the time of purchase, for every £200 you save the Government contributes £50
  • Maximum savings of £12,000 per person, therefore maximum bonus of £3,000 per person
  • As they are ISAs they are tax free
  • Some providers are offering up to 3% interest rates*
  • Can be used only to purchase first homes by first-time buyers
  • Can make initial deposit of up to £1,200 and then up to £200 a month after that
  • House value can be up to £250,000 outside of London
  • House value can be up to £450,000 in London
  • Available until 30 November 2019

photodune-3488733-mortgage-calculator-xs 2There are a few downsides should you need to withdraw the money early. Doing so will forfeit the Government bonus but not the interest received to date. You will be able to pay the money back in, subject to the maximum monthly saving limit.

Also, to qualify for the full £3,000 bonus will take four and a half years of saving (by which time an under the stairs cupboard in Derby might be worth £1,000,000 of course!) but nonetheless you do not need to reach £12,000 saved to get a bonus, the bonus will be 25% of whatever is saved subject to a minimum of £1,600.

It is worth pointing out that the first-time buyer will never see the Government bonus in cash with it being paid straight to the solicitor upon completion of a house purchase. It is also worth noting that the definition of first time buyer is quite clear and specific – you cannot have ever had any interest in any residential property, even if it was inherited and even if it is outside the UK.

Technically the rules prohibit an individual opening a cash ISA and help to buy ISA in the same tax year, some clever providers however have come up with a way round this by having a cash and help to buy ISA in one ‘wrapper’.

With full access, great interest rates (at the time of writing) and the fact that two individuals can both use a £3,000 bonus on one house purchase there’s little to dissuade.

David Burridge
First Time Buyer

*Based on a search conducted on the 25th January 2016 on Money Supermarket.

RMT Ref 134/01.16/SL

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