The Help to Buy ISA is closing to new account holders on the 30th November 2019. The Help to Buy ISA is an account which offers a government top up of 25% on what you’ve saved when you use the monies to purchase your first home. I’ve put together a few reasons why if you are eligible for one of these accounts, you should open one now while you have the chance.
Unlike the new Lifetime ISA which has an age bracket of 18 to 39, the Help to buy ISA can be opened from age 16 and has no upper age limit. If there is something I have learned in my advising career it is that everyone is different and some people choose to get on the property ladder later on in life.
If you are just about to buy a property within the next few months a Help to Buy ISA really has the edge as it can be used as soon as you have the minimum saving of £1,600. As you are able to open the Help to Buy ISA with a £1000 deposit, and then make the maximum monthly investments of £200 within a few months you can use it alongside a house purchase to get that extra 25%. Unlike the Lifetime ISA which can only be used once it has been open for a year.
The great thing is that even though you must open the Help to Buy ISA before the deadline you do not have to claim the bonus until 1st December 2030. Giving you plenty of time to save the maximum amount of £12,000 (maximum government bonus of £3,000). The Help to Buy bonus is not claimed until you purchase your property, therefore you will not receive any penalties if you decide to use the monies on something else although you would not receive the bonus either. However the Lifetime ISA adds the bonus along the way but applies a penalty if you withdraw the monies and do not use it for purchasing a home or in retirement, which could lead to a loss for indecisive savers.
Sammy McCann BSc (Hons), Cert CII (MP)
16th September 2019