Some commentators fear they may push up house prices, but they’re likely to prove hugely popular with young people who have found it difficult to raise the deposit needed to take their first step on the property ladder.
The new ISAs will be available in the autumn and are designed specifically for first time buyers. The key point is that the government will add £25 to every £100 you save. The maximum bonus is £3,000, available when your savings in the ISA reach £12,000.
There is no minimum investment. You can start with an initial deposit of up to £1,000 and then add up to £200 every month. This means it would take you four and half years to invest a total of £12,000 and so qualify for the maximum bonus of £3,000.
However, you don’t have to invest that much or save for that long. The minimum investment needed in the ISA to trigger the bonus is only £1,600.
Couples buying a home together can each take out a Help to Buy ISA and so double the bonus.
The ISAs only provide the extra 25% if the money is used to buy a home. The bonus will be available for homes worth up to £450,000 in London and £250,000 in the rest of the country.
The ISAs can be used in conjunction with other initiatives such as the Help to Buy schemes. There are various options that enable buyers to get a new home with only a 5% deposit. The government provides a loan or guarantee for a further 20%, making a total deposit of 25%.
It means that it’s possible to buy a home with the mortgage covering only 75% of the value of the property.
Please contact us on 01985 214444 if you would like advice about the legal aspects of buying and selling a home.