Six Help to Buy: ISA providers named by the Treasury
The first providers of the Help to Buy: ISA have been revealed.
Announced in the Spring Budget, the Help to Buy: ISA will give savers the chance to earn a 25% tax-free bonus from the Government on top of their monthly deposits.
This arrangement is designed to help first-time buyers put together a savings pot to go towards a deposit on a property. The scheme will launch on 1st December and can be used to help pay towards a home worth up to £450,000 in London and up to £250,000 outside of London.
Signed-up providers
The banks and building societies that will be participating in the scheme are as follows:
- Barclays
- Lloyds Banking Group
- Nationwide Building Society
- NatWest
- Santander
- Virgin Money
Chancellor of the Exchequer George Osborne said that the scheme would "reward thousands of people who are working hard to save for their first home by giving them a 25% boost to their deposit savings”.
The Treasury has confirmed to loveMONEY that this is not an exhaustive list and that there is still time for other providers to be welcomed into the scheme.
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How the scheme works
[SPOTLIGHT]Each month, a maximum of £200 can be paid into the account. The Government will then top up that deposit with a 25% bonus – so if you pay in £200 a month, a further £50 will be added.
Initially, savers can deposit a lump sum of up to £1,000, which is also eligible for the bonus, and deposit the regular £200 monthly maximum at the same time. This means that a deposit of £1,200 can be made when an account is opened, to which the Government will add £300 to make up a total of £1,500.
The maximum bonus paid out on an account will be £3,000. You would need to pay in £12,000 to receive this. Given the monthly deposit limit, someone who paid the initial £1,000 lump sum and continued to pay in £200 per month would have to wait 55 months – over four and a half years – to earn the maximum £3,000 bonus on one of these accounts.
There is no limit to how long these accounts can stay open, so those not able to pay in £200 per month can still earn the total £3,000 bonus at their own pace.
ISAs are, by their nature, individual accounts. So a couple saving together could hold one Help to Buy: ISA each and benefit from a potential £6,000 when saving towards a deposit for their first home.
Treasury guidance says that each provider of the Help to Buy: ISA will offer its own interest rate for each account, and be able to apply normal ISA withdrawal rules too.
Interest rates have not yet been disclosed; Nationwide Building Society, for instance, was able to tell us that it would be paying interest on its account, but that it was too early to give an exact rate.
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