New Government Scheme Wont Leave You Disappointed
While some praise it for supporting 83,000 people since its launch, others have warned that it will cause the first-time buyer market to slump back into decline. Yes, it’s clear that the Help-to-Buy scheme has been a controversial matter. However, the government announcement of the Help-to-Buy ISA that began on 1st December 2015, is set to convert all critics and become a no-brainer for first-time buyers.
So how does it work? In a nutshell, being part of the Help-to-Buy ISA scheme will mean the government will boost savings made for your first home by 25%. So in monetary terms, for every £200 you save, the government will contribute £50. The savings rules are as follows:
- The maximum you can receive from the government is £3,000 in total, which means the most you can save in the ISA is £12,000
- On the other end of the scale, the minimum savings to qualify is £1,600, equating to a £400 bonus
- You may save up to £200 a month, however, in the first month, you may produce a first deposit of £1,200 straight off.
And this is all tax free
You may be wondering what the catch is, however in honesty, I’m struggling to find a major one other than the fact that not everyone in the UK is eligible. To qualify for the scheme, you must be 16 or over, have a valid National Insurance number, be a UK resident and, of course, be a first-time buyer. You must not have another active cash ISA in the same tax year, however, if you opened a cash ISA in 2015 fear not, you can transfer savings of up to £1,200 into the new ISA. Any savings of more than £1,200 should be moved into either a stocks and shares ISA or non-ISA account, however, with this you will lose the tax benefits.
While you won’t earn interest on the government bonus, you will from your lender. So far nine lenders have announced their involvement, however as you would expect interest rates vary between them. The good news is that you will be able to switch between providers as interest rates fluctuate in order to get the most desirable deal, so ensure to keep updated at the latest trends.
In order to ensure that the government bonus is used for what it is intended, the bonus will only be paid at the point that the first home is purchased. This is where we come in. Our conveyancing team will have a direct role in obtaining your bonus from the government, forming an application for the bonus on behalf of you, confirming your eligibility to receive the funds.
‘The Week’ states that if you don’t open one you are effectively turning down free money, and as a young person still yet to purchase my first home, I am struggling to find major fault. So for more information, do not hesitate to contact our conveyancing team on 01604 258558 and we will be happy to discuss things further.