New Help For First Time Buyers

Aside from cheaper beer, the big news out of the Budget is the Help to Buy ISA.

Details are sketchy at the moment and according to Treasury documents there is much yet to be finalised. We’ve been here before, when both the Help to Buy mortgage schemes (equity loan and mortgage guarantee) were announced before lenders had worked out the practicalities.

So it is with the ISA. The scheme is planned for launch in the Autumn, and the Treasury is now talking to bank & building societies about how to make that happen. As with the mortgage guarantee there will be qualifying criteria and a scheme administrator to handle the logistics.

However in outline the Help to Buy ISA allows up to £1,000 as an initial deposit then regular saving up to £200 per month in a specific HTB ISA product – to be offered by the kind of people who do regular cash ISAs at the moment.

When the saver uses that money to buy their first home (and it’s only available to prospective first time buyers) the government will pay out a bonus of 25% of the saved amount – to a maximum of £3,000. The overall savings pot is therefore limited to £12,000.

One scheme is available per person so couples buying together can get up to £6,000 between them. While the HTB ISA is set to be available initially for four years to new accounts, there is no expiry date on the savings account or government bonus: you can take as long as you like to reach your £12,000 limit.

Overall, then, that is an extraordinarily higher return than you’d get from any other (sensible) saving scheme. But given a) it doesn’t exist yet and b) the saving limits, it’s not going to have any immediate impact. This is very much designed for those hoping to buy in a few years time, rather than prospective buyers currently house-hunting.

YOUR HOME OR PROPERTY MAY BE RESPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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