Lauren Monckton No Comments

The Help to Buy ISA is a government backed scheme that provides a 25% bonus on the balance of the account with a maximum bonus of £3,000, provided the money is put towards the purchase of your first home before 1st December 2030 – so long as the house price is lower than £250,000 (£450,000 in London).

Whilst many young people are concentrating on their education and perhaps the purchase of their first car, it may prove prudent for them to look slightly further ahead.

The Help to Buy ISA scheme allows the account holder until the 1st December 2030 to purchase a home. This means that if a 16 year old opened the account today they would have until they were 27 years of age to save and complete their purchase.

What about a Lifetime ISA?

The account is similar to the Lifetime ISA (LISA) but does have some advantages. For instance, you are able to open a Help to Buy ISA at just 16, two years earlier than a LISA. In addition, you are able to withdraw money from the help to buy ISA at any time and keep the account open (although you will not receive a bonus on any withdrawn funds).

Unlike a LISA, where the account has to have been open for 12 months before qualifying for the bonus, the Help to Buy ISA qualifies for a bonus as soon as it reaches a balance of £1,600. This could be achieved within three months if the maximum amount is deposited into the account each month (£1,200 in the first month followed by £200 every month thereafter).

It is worth noting that whilst you can have a Help to Buy ISA and a LISA concurrently, you can only claim the bonus on one of them when buying your first home.

 Although the scheme rules allow an initial deposit of £1,200, the accounts can be opened from as little as £1 which secures the account holder’s eligibility for the scheme.

There are no minimum monthly deposit requirements, so even if you are not currently able to pay into the account, it gives the ability to do so later in life when your disposable income may be higher and priorities have changed.

With the 30th November 2019 deadline for opening a Help to Buy ISA rapidly approaching, it is crucial to move quickly in order to make the most of this opportunity.

Even if you think there is only a small chance of purchasing your first home before the deadline it is worth doing. If you don’t end up buying a home before the deadline, you can use the money and interest accrued for anything you like – so you will have lost nothing.

Get your financial planning review by calling Temple Wealth Management on 01329 282882.