Three months left to open a Help To Buy ISA
Potential first-time buyers have just three months to open a Help To Buy ISA; the accounts will no longer be available to new investors after 30 November 2019.
The government tops up any contributions in a Help to Buy ISA by 25 per cent, up to a total contribution limit of £12,000. So, for every £200 you save, the government will contribute £50. This means you can earn a maximum of £3,000 from the government.
The minimum amount you need to save to qualify for a government bonus is £1,600 (which gives you a £400 bonus).
From 30 November 2019, the Help to Buy ISA will no longer be available for new investors, leaving individuals with just three months to set one up. Savers with Help to Buy ISAs can still qualify for the bonus as long as they buy a property before December 2030.
The accounts are especially appealing to potential first-time buyers aged over 40. This is because Lifetime ISAs – which also reward first-time buyers with a 25 per cent bonus – are only available to people aged 18 to 39.
The Lifetime ISA rules also stipulate that you must have held the Lifetime ISA for 12 months before using the money to buy your first home. But the Help To Buy ISA doesn’t have this rule – making the account preferable for anyone who plans to buy a home in the next year.
For under 40s, the Lifetime ISA is generally a better bet. Savers are able to use the proceeds from the tax-efficient scheme to either buy a first home or to contribute towards retirement, with the government offering a 25 per cent annual bonus on up to £4,000 of contributions made each year.
Contributions can be made up to the age of 50, meaning someone who saved the maximum £4,000 each year, and so received £1,000 a year from the government, would receive £32,000 in total towards their home or retirement.