23 September 2021

Saving with the Help to Buy ISA

Not only is it a specific savings account dedicated to your deposit, but the Government also boost your savings with a percentage of the amount you've saved. If you use the ISA to its full potential, you could get a £3000 contribution from the Government to your savings!

Want to know more? Keep reading to find out why you should think about opening a Help to Buy ISA.

What is the Help to Buy ISA?

The Help to Buy scheme assists first-time buyers by offering them an equity loan to help them put down a larger deposit.

This helps when seeking a mortgage for homes that may otherwise be out of their budget, or to get better mortgage proposals (perhaps less interest).

When saving with the Help to Buy ISA, the government will top up any contributions you make by 25% up to the total contribution limit of £12,000. This means you can earn a maximum of £3000 from the government within the ISA.

Who is the Help to Buy ISA for?

The Help to Buy ISA is for those who are saving specifically for a first-time home and are wanting to take advantage of the Help to Buy scheme.

Those who are eligible must be:
  • Over 16 years of age
  • A first-time buyer of a home (in the UK and not abroad)
  • Can be used with any mortgage (not only Help to Buy)
  • Have only one Help to Buy ISA open

How do I get started saving for a mortgage with an ISA?

You can start saving with the Help to Buy ISA by contacting your bank.

The maximum you can start with is £1000, and then you can deposit up to £200 per month to a total of £12,000. When you buy your home, you will be credited with 25% of your savings by the Government, which will be deducted from your mortgage.

Here’s how the Help to Buy works out practically over the five years it may take to save a home:
Your contribution Yearly investment Total saved*

Initial deposit £1000 
  • Year 1 £2400 (£200 / month) £3400
  • Year 2 £2400 (£200 / month) £5800
  • Year 3 £2400 (£200 / month) £8200
  • Year 4 £2400 (£200 / month) £10,600
  • Year 5 £200 / month until you reach £12,000 £12,000
  • Government bonus £3000 £15,000
Total £15,000  

By saving £200 a month for 5 years, you'll be well on your way to buying your dream home, especially with the Help to Buy Equity Loan available too.

What if I save the money and decide not to buy a home?

If you decide against a mortgage in the end, you can take out your money at any point – though you won’t receive the government bonus/incentive. The bonus is restricted to those who buy a home with the savings.

But I already own a home, can I also get help with an ISA account?

The Help to Buy scheme is still available to you regardless of being a first-time buyer – but that also has the requirement that you own no other home.

The Help to Buy ISA is strictly for first-time buyers.

You may want to know:

  • Couples are treated separately (as individuals) – there’s no joint Help to Buy ISA
  • It can be used for properties that cost up to £250,000 (or £450,000 in London)
  • You can rent out your property if your circumstances change (for example leaving home for work), but it is restrictive – though if you’re buying it to rent out, you could be eligible to give the government incentive back.
  • You’re only allowed one Help to Buy ISA account
  • You may be able to open a Help to Buy ISA and Cash ISA in the same year (subject to each bank’s policies)

When and where can I get a Help to Buy ISA?

There is a deadline of opening the Help to Buy ISA account – November 31st 2019. So make sure you open one before this date so you don't miss out!

To open the ISA, its a good idea to check the market for interest rates. You can open your ISA with the bank or building society thats offering the best interest rates.