The Government has announced a Help to Buy: ISA in the Budget. Here's how it will work.
George Osborne has announced the launch of the Help to Buy: ISA in his Budget speech, designed to help first-time buyers build up a deposit.
For first-time buyers who take up the Help to Buy: ISA, the Government will top-up their savings pots by 25%. So if you manage to save the maximum £200 every month, that’s a £50 boost.
There is a £3,000 cap on savings of £12,000.
While you can't save more than £200 a month into the Help to Buy: ISA, you can deposit an additional £1,000 when the account is first opened.
[SPOTLIGHT]The limit is one ISA per person, not per household so people buying together can reap bonuses. However, an individual can only open one Help to Buy: ISA in the lifetime of the scheme.
You can put a Help to Buy: ISA pot towards houses worth up to £450,000 in London and £250,000 in the rest of the UK.
Once the scheme opens, savers will have four years to open a Help to Buy: ISA. Once opened, there’s no limit on how long they can save for. They'll get the Government bonus when they’re ready to buy their first home.
If you don’t plan to save for that long, you can claim at any time, subject to a minimum £400 Government bonus.
Many of the general ISA rules apply such as tax-free interest. Interest rates, withdrawal rules and transfer rules will be set at the provider's discretion.
The Help to Buy: ISA will be available from Autumn 2015.
Looking for another type of ISA? Take a look at lovemoney.com's ISA comparison centre