MARTIN Lewis is urging all wannabe first-time buyers to open a Help to Buy Isa in the next six months or risk missing out on up to £3,000 free cash.
A range of high street banks offer the specialised savings account that see the Government top-up your cash by 25 per cent.
2 Martin Lewis reckons you should open a Help to Buy Isa even if you’re not ready to buy a home yetCredit: Rex Features
They were launched at the end of 2015 to help first-time buyers onto the property ladder but are being dropped from November 30 in favour of the Lifetime Isa (LISA) instead.
The MoneySavingExpert recommends that first-time buyers open an account now, even if they’re not thinking about buying a home yet.
You only need £1 to open an account with, which you can then continue to put money into when you are ready.
The Government will still boost your savings when you buy your first home up until November 30 2029.
What are the best Help to Buy Isas?MANY high street banks offer Help to Buy Isas but not all of them offer the same interest rates. Here are the top five accounts: Tipton & Coseley
Interest rate: 2.95 per cent
Open with: £10
Darlington Building Society
Interest rate: 2.8 per cent
Open with: £1
Interest rate: 2.58 per cent
Open with: £1
Interest rate: 2.5 per cent
Open with: £1
Interest rate: 2.5 per cent
Open with: N/A
The maximum you can open an account with is a £1,200 lump sum and you’re limited to putting in £200 a month.
The minimum you must have saved for the Government bonus to kick in is £1,400, which will be boosted by £350.
The most the Government will give you is £3,000 on savings worth up to £12,000, bringing your total nest egg up to £15,000.
In the MSE newsletter, Martin wrote: “If you think you’ll need these [the Government top-up] but aren’t sure, just open them.
“You need £1 in a Help To Buy Isa by November 30 or you lose the opportunity.”
2 What’s the difference between the Help to Buy Isa and a LISA?
The Government will also give up a 25 per cent bonus if you use your LISA to buy a home or for retirement.
You can have both Isas at the same time but you can only use the bonus from one of them towards buying a house.
The money guru says that it’s still worth opening a opening a Help To Buy account even if you’re not sure – you can always decide later.
Martin added: “They’re a great way to save for older children. If your kids are 16+ for a Help to Buy Isa or 18+ for a LISA, the bonus means these are a great place to give them money to save in, if you have it.”
Help to Buy accounts work in the same way as any other Isa account, so it’s a chance to earn interest on the cash even if you don’t end up using it for your first house.
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Some first-time buyers are getting into debt due to a Help to Buy Isa bonus catch that leaves them borrowing cash from from friends and family to cover a deposit gap.
We spoke to first-time buyers Alex Moulton and Matt Priest who were caught out by the small print and missed out on the £4,000 bonus because their house was too expensive.
Buying a home on the “wrong” day could end up costing first-time buyers £4,760 thanks to a quirk in the Help to Buy scheme.
What help is out there for first-time buyers?GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.Help to Buy Isa – It’s a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there’s a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan – The Government will lend you up to 20 per cent of the home’s value – or 40 per cent in London – after you’ve put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa – This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership – Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you’re restricted to specific ones.
“First dibs” in London – London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative – A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
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