If you are a first-time buyer the Help to Buy Scheme, launched on 1st December 2015, allows you to begin saving to qualify for a government bonus, which will be used towards the purchase of your first home.
The scheme permits you to put savings into an individual savings account, after which a bonus will be paid to you by the government.
It is possible to save up to a maximum of £200 per month, which the government will then top up by 25%. So, for every £200 you save, you receive a government bonus of £50. There is a minimum bonus of £400 and a maximum of up to £3,000. This means that to qualify for the minimum £400 bonus, there must be at least £1,600 in the Help to Buy ISA. Similarly, a bonus will not be available on any sum exceeding £12,000.
In order to qualify for the scheme, the property must be one in which you intend to live and must not exceed either £250,000 outside of London or £450,000 in London. It must also be funded by way of a loan or mortgage, however, there is no requirement that the mortgage is in the ISA holder’s name.
The scheme directly involves your solicitor and works in the following way:
- You deposit money in your Help to Buy ISA account.
- When you decide to purchase your first home, you will close your ISA account and receive a closing letter from your ISA manager.
- You should pass the closing letter on to your solicitor, who will then make the application for the bonus on your behalf.
- Your solicitor will then be able to receive the bonus, and use the bonus amount to complete the purchase of your home.
Note: The first eligible bonus applications can be made from 1st February 2016.
