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How to Open a Help To Buy ISA Before the Deadline (end of November 2019)

Editor’s note: Today I give you a guest post by Lauren, the creator of Brit On A Budget where she posts about innovative ways to make and save money. You can follow Lauren on Facebook and Twitter.

You might have seen numerous tweets and adverts encouraging people to open a Help to Buy ISA before 30th November this year, although you may have ignored them thinking that it doesn’t apply to you.

However, you don’t have to be interested in buying a house right now to open a Help to Buy ISA. Keep reading to find out how it applies to you. (If you are not sure where Help to Buy ISA fits with the other members of the ISA family, check out this Comprehensive Guide to ISA.)

What is a Help to Buy ISA?

A Help to Buy ISA is a government scheme designed to help first time buyers save for a mortgage deposit to buy a home. To qualify, you must be classified as a first-time buyer which means you do not own a property anywhere in the world.

Like any ISA product, your savings are tax free, although the Help to Buy ISA gives you the added bonus of receiving government contributions.

How does Help to Buy ISA work?

The government will top up your contributions by an extra 25%, up to your contribution limit of £12,000. This means that you can earn a maximum of £3,000 from the government to aid your savings towards your first property purchase.

So, for every £200 you save, the government will contribute £50. You can set the ball rolling with an initial deposit of up to £1,000, and the minimum amount you need to save for a government bonus is £1,600, which will give you a £400 bonus.

Help to Buy ISAs are available to each first-time buyer, which means that if you’re buying a property with your partner you can claim up to £6,000 between you to put towards your deposit.

Can I withdraw my money before buying a house?

If you decide you don’t want to use the money to buy your first home, you can withdraw your savings whenever you want. You will still get the interest you are due, but you will not be able to claim the government bonus.

How do I claim the government bonus?

When you are ready to buy a home and receive the bonus, you should let your ISA provider know that you are closing down your Help to Buy ISA account and transfer the funds into your solicitor’s account. You will then receive a closing letter from your ISA provider, which you will need to give to your conveyancers.

During the stages of exchanging and completing your home purchase, they can then use the letter to apply online for the government bonus.

How long do I have left to open an account?

You can open your account any time however, the cut-off date to open one is 30th November 2019. You will be able to save into it until 30th November 2029 and the bonus will be added as long as you use it for a deposit by 1st December 2030.

If you can, it is worth saving the maximum allowance of £1,200 for month one before the deadline date, although don’t worry if you can’t! You can open one now and stick in £1.

The bonus is only eligible on homes worth £250,000 outside of London and £450,000 for homes in London (defined as inner and outer London boroughs).

Where can I open my Help to Buy ISA?

As well as the government bonus, you can also earn interest on your cash savings depending on who you open your account with. Barclays have an interest rate of 2.58% and Nationwide and Natwest have an interest rate of 2.5%. Additionally, you do not have to already be a customer with the bank in order to open an ISA with them.

Who qualifies?

  • You must be a first-time buyer
  • You must be aged 16 or over
  • You can’t use the Help to Buy ISA if you’re going to rent out the property
  • You can’t use the Help to Buy ISA on an overseas property

Even if buying a house isn’t on your agenda at the moment, it is important to start planning for your future! Help to Buy ISAs are the way to get yourself on the property ladder, but remember, you only have until 30th November to open yours!

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