Are you a first time buyer? Here is a tip you do not want to miss when purchasing your first home...
Getting on the housing ladder and saving for a deposit as a first time buyer can be extremely difficult. Therefore, the Government introduced Help to Buy ISAs in 2015 to help first time buyers to make that initial step a little easier. For every £200 you save in your Help to Buy ISA account, you will receive a government bonus of an additional £50. The maximum bonus you can receive is £3000.
If you are a first time buyer, a UK resident aged over 16 with a valid National Insurance number and own no other property in the world, you would be eligible to open a Help to Buy ISA. However, if you have opened a Cash ISA in the same tax year, you can open a Help to Buy ISA but there are additional steps involved.
Your new home must be worth under £250,000 (or £450,000 in London), be in the UK and must be bought as a home to be lived in by you and not by a tenant as a Buy to Let transaction. The Help to Buy ISA can be combined with other First Time Buyer initiatives run by the Government.
The ISA is available in branch and online, at a range of banks and building societies and is becoming an increasingly popular product; over 25 banks/building societies now offer this. If you are purchasing jointly with another first time buyer, you can each take out your own Help to Buy ISA.
Once you have opened an account, in the first month you can deposit up to £1,200 (or transfer this from a previous ISA) and thereafter up to £200 a month. The minimum bonus available is £400; therefore you need to have saved at least £1,600 before you can claim a bonus.
Once you have saved the required amount and have had an offer accepted on your first home, you need to instruct a Solicitor/Conveyancer to carry out the legal process of the transaction. Your Solicitor/Conveyancer must claim the bonus for you so it is a good idea to advise them of your Help to Buy ISA at the outset. The bonus cannot be used for the 10% deposit due at exchange of contracts or other indirect costs associated with buying a home but can be used to pay the balance cost of your home at completion.
Your Solicitor/Conveyancer will advise you when to close your Help to Buy ISA and you will then have access to the funds you have saved and your Solicitor/Conveyancer will be able to apply for the bonus in plenty of time for completion.
You must open an ISA by 30th November 2019 and if opened before that date, you will need to claim your bonus by 1st December 2030, so you can keep saving until 30th November 2030.
For more information on Help to Buy ISA’s, Lifetime ISA’s shared ownership, right to buy or any other queries if you are a first time buyer, please contact Emma Worth at Battens Solicitors on 01935 846205 or email firstname.lastname@example.org