Are you a first-time buyer or looking to move up the property ladder? You might be familiar with the old Help to Buy ISA scheme, which was a tax-free savings account designed to help individuals save for their first home. The scheme was quite popular, but it has now closed to new investors. Let's revisit the old Help to Buy ISA and understand what it was all about.
Introduced in 2015, the Help to Buy ISA aimed to provide a helping hand to those struggling to save for a deposit. The government topped up savings by 25%, up to a maximum of £3,000 for the average first-time property purchase. Here's a breakdown of this scheme:
How the Help to Buy ISA Worked
The scheme was simple: save up to £200 each month, and the government would contribute a monthly bonus of up to £50. The overall bonus could reach up to £3,000, which was added to your savings when you came to buy your first home.
Savers could put in a lump sum of up to £1,200 initially, followed by monthly savings of up to £200. The maximum government bonus of £3,000 was only available for those who saved at least £12,000.
Who Was Eligible?
To qualify for the Help to Buy ISA, you had to be a first-time buyer. This meant you had to be buying your first home and not have owned or rented a property before. Also, the property you were buying had to be in the UK and cost no more than £250,000 (or £450,000 in London).
Moreover, the account holder must be aged 16 or over and a UK citizen or a member of the armed forces. The scheme was not available to non-UK residents or those who already had an ISA in the same tax year.
Closing the Scheme
The Help to Buy ISA scheme closed to new investors on November 30, 2019. If you had an account open by this date, you could continue saving into it and claim the government bonus until November 30, 2029.
These accounts, once closed, could not be reopened, and bonuses could not be claimed for any other property than the one originally intended. Also, the bonus could only be put towards the purchase of the property and could not be withdrawn.
The Help to Buy: Equity Loan Scheme
For those looking for an alternative to the old Help to Buy ISA, the Help to Buy: Equity Loan scheme might be of interest. This scheme is different as it involves the government lending you money to buy a home.
The scheme provides you with an equity loan for up to 20% (40% in London) of the cost of a newly built home, which you pay back at a later date. The equity loan contributes to the total price of the property, so you'll need to secure a mortgage for the rest.
Eligibility for the Equity Loan Scheme
To be eligible for the Equity Loan scheme, you must be a first-time buyer, or a crystal-living helpовеer, have a deposit of at least 5% of the property price, and the home must be your only property. Additionally, the property must be newly built, have a purchase price below £600,000, and be purchased from a registered Help to Buy builder.
The scheme is set to run until 2021 for England (and 2023 for London), and the funds are limited, so it's important to act quickly if you're interested.
If you're a first-time buyer or looking to climb the property ladder, understanding these schemes can help you navigate your way to homeownership. While the old Help to Buy ISA scheme is no longer available, the Help to Buy: Equity Loan scheme offers another attractive option for aspiring homeowners.