Make the most of savings options

18 Oct 2019

Time running out on Help to Buy ISAs

Individual Savings accounts, or ISAs, are an effective, tax-free method  of saving.

When you’re setting out to find property that will become your first home and putting away every possible penny, the Help to Buy and Lifetime ISAs include an attractive cash boost from Government every time you bank that vital cash.

But the Help to Buy ISA is about to close to new savers on November 30, so you need to make the most of your options now.

If you are over 16 and have never owned a home, but plan to start a house search in the future, you simply need to open a Help to Buy ISA and deposit £1 before the end of November. This will still allow you to save into the account and benefit from the Government top up for the next ten years.

Pros and Cons

Before you jump in, compare the Help to Buy ISA against the other scheme that also offers a free Government bonus – the Lifetime ISA. 

All ISAs are offered by banks and building societies and you should search online for the best interest rates currently on offer.

Help to Buy ISA

Help to Buy ISA allows you to save £1,200 in the first month and up to £200 a month after that. Government tops up your savings by 25% up to the contribution limit of £12,00, so for every £200 you save, the Government contributes a further £50, earning you a maximum of £3,000.

You can then use your savings, plus the bonus, to buy a home worth up to £250,000 outside London and £450,000 in London. With the scheme closing to new savers at the end of November, you must then claim your bonus within ten years, by 1 December 2030.

Lifetime ISA

Lifetime ISA allows you to save substantially more - up to £4,000 a year - and still receive the 25% bonus. You could earn a total of £32,000 in bonuses if you pay in the maximum £128,000 over 32 years, from age 18. 

You can use the money to buy your first home, worth up to £450,000 anywhere in UK, or for retirement after you reach 60. But there is a significant penalty if you withdraw money for any reasons other than buying your first home, reaching 60, or if you are terminally ill. A Lifetime ISA is therefore only an option if you can afford to lock the savings away.

You can have both

You can save into both ISAs if you meet the eligibility criteria, but you will only receive the 25% Government bonus on one of them when buying a home. Options include using the bonus from your Help to Buy ISA to buy your first home, then your Lifetime ISA and its bonuses for retirement once you turn 60.

How much do you need to save to buy a home?

Property specialists available through Online Property Agents have all the advice you need, from local property prices and advice on searching for property for sale online, to securing the best mortgage deals in the marketplace.

For further information, contact low cost estate agents Online Estate Agents on 0330 1244 786.

Return to blog