Help to Buy ISA launching
1st December 2015 marks the launch of the Help to Buy ISA, which was announced in this year’s budget. This may be of particular relevance for your children or grandchildren who are hoping to get onto the property ladder, as it will boost the amount they save by 25%. For every £200 an individual saves, the government will add a further £50 – up to a maximum “bonus” of £3,000 per person, based on £12,000 saved.
Accounts will be available for four years, and once opened there is no time limit on how long one can save for. The accounts are per person rather than per home purchased, so if a couple are both saving they can put aside £24,000 between them and the government will add £6,000 – a great boost to any deposit. There are, of course, a number of conditions attached to the new accounts, including property purchase price limits of £250,000 outside London and £450,000 inside London. To put these numbers into context, a couple saving the full amount will have a 12% deposit towards a home. Also, any bonus awarded by the government will be added when the home is bought – it won’t accrue like tax relief on a pension.
This is certainly a generous planning area to be considered for someone wishing to buy their first home – receiving a 25% return when interest rates are at an historical low and are expected to remain there is not something to be ignored.