The scheme is designed to help thousands of young people to get on the housing ladder.
The government has pledged to add £25 to every £100 you save for a home. 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 is 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%.
The government has outlined five simple steps that first time buyers need to follow to claim their bonus from the Help to Buy ISA:
1. first time buyer puts money away in a Help to Buy: ISA account
2. first time buyer closes their account when they are ready to purchase their first home and receives a closing letter from their ISA manager
3. first time buyer gives the closing letter to their solicitor
4. using the letter, the solicitor applies online for the government bonus
5. bonus is transferred to the solicitor, who completes the purchase of the home using the full bonus amount.
Several banks and building societies, including Barclays, Lloyds, Nationwide, NatWest, Santander, and Virgin Money, are already offering Help to Buy ISAs and most others will be doing so soon.
Please contact Jo Ayrton or Sarah Gratton in our Warminster office on 01985 214444, or Sandra Smith and Laura McCarthy in our Westbury office on 01373 865577 if you would like advice about the legal aspects of buying and selling a home.