During the recent Budget, Chancellor George Osborne unveiled plans for a new help-to-buy ISA, but what exactly does this news mean for first time buyers?
In basic terms, the new ISA will enable people to earn tax-free interest on any money which they put in it. However, in addition to this the government will also add a 25% bonus when you come to purchase a house (capped at £3K).
Of course, there are some restraints on this scheme – both in terms of the amount you can deposit per month and the value of the property you can buy. Initially you are allowed to deposit up to £1,000, followed by £200 per month thereafter.
In terms of the maximum value of the properties you can buy, in London it is up to £450,000 whereas elsewhere in the UK it is capped at £250,000.
It is worth noting that this ISA is only available for first time buyers and you may have only one within your lifetime. However, the ISA is not limited to one per property, which meaning that if you are looking to buy as a couple, you are able to combine two people’s ISAs and bonuses together.
The ISAs should be available by autumn of this year and are due to be available for around 4 years, so we shall have to watch this space…
- 23 April 2015