Government Schemes for First Time Buyers

With the Help to Buy ISA being withdrawn from 30th November 2019, what options are available to make your money go further?

The introduction of the Help to Buy ISA in December 2015 provided a great way for first-time buyers to boost the amount of money they had available when buying their first home. Here at Blunts solicitors we have seen lots of happy first-time buyers achieve their dream of owning their first property, with a little help from the Government. The announcement that the Help to Buy ISA is being withdrawn from 30 November 2019 therefore raises questions as to what other options are available in order to make your money go further?

Although new Help to Buy ISAs won’t be available after 30 November 2019, ISAs opened before can still be used and paid into until 1 December 2030 and the Lifetime ISA will be available to open as an alternative going forward. So, which is the best option for you?

 

Help to Buy ISA

Pros

  • It can be opened with £1200 with a maximum of £200 paid in per month thereafter.
  • The bonus can be claimed once you have savings of £1600 (a minimum of 3 months since opening) and will provide a bonus paid to your Conveyancer of 25%
  • You can use the ISA bonus with other schemes such as Help to Buy and Shared Ownership
  • You can withdraw from your Help to Buy ISA however can only pay back in at £200 per month

Cons

  • You can only claim a maximum of £3000 bonus.
  • You can only be used on house purchases below £250,000 (£450,000 in London)

 

Lifetime ISA

Pros

  • The bonus is paid monthly into your account meaning you can accrue interest on the bonus as well as payments
  • You can use the ISA bonus with other schemes such as Help to Buy and Shared Ownership
  • The bonus can be used on purchase prices up to a maximum of £450,000
  • You can make larger yearly contributions compared to a Help to Buy ISA

Cons

  • Bonus cannot be claimed within a year of having opened the account
  • You will incur a withdrawal charge for any withdrawals other than for buying your first house
  • Not as many scheme providers available compared to the Help to Buy ISA
  • You cannot open an account if you are over 40 years old or under 18 years old

 

Both the Help to Buy ISA and Lifetime ISA offer different alternatives for first-time buyers. If you are planning to buy your first house quite soon (within a year) and you know you will be paying less than £250,000, the Help to Buy ISA would be a great option. You can use the government bonus scheme, without the limitation of having to wait for a year like you would with the Lifetime ISA. The Help to Buy ISA is also the only option if you are under 18 or over 40 years old. But you need to be quick, time is running out!

If you are unsure how much you will be paying or you know your purchase will be over £250,000 and you do not think a purchase is imminent (over a year away,) the Lifetime ISA offers a larger bonus without the same limitations on price.

At Blunts we love helping first-time buyers achieve their dream of owning their first home and the perks of these government bonuses help make it a little bit easier. We are also familiar with other government scheme such as the Help to Buy Equity Loan, Shared Ownership and First Time Buyer relief. We are here to guide you through your purchase as smoothly as possible regardless of which option you choose.

 

If you have any other questions, please get in touch with us or call us on 01625 429131.

All this information can be found on our website www.bluntssolicitors.co.uk