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ISA savings boost for first time buyers

In his budget this week, Chancellor Osborne announced some good news for future first time buyers of UK properties by offering up to £3,000 towards a deposit on their home.

Last updated on June 10th, 2015 at 03:05 pm

How will he do this?

The contribution will come by way of an ISA boost from the government. If you’re a first time buyer, you will be able to save in a ‘help to buy ISA’ and the government will increase your savings by 25%; giving you £50 for every £200 you save. The maximum amount that the government will give is £3,000, so to get the full amount you will need to save £12,000. This the maximum that can be saved in the ISA. There is no minimum monthly saving, but there is a maximum of £200 a month. The bonus is per individual so if you are a couple, you can each take out an ISA and receive a bonus of £6,000 if you save £24,000 towards the deposit on a house. Interest will be paid on the ISAs in addition to the government’s bonus.

How do I qualify?

To qualify for the bonus, you need to be 16 or over when you take out the ISA and have never owned a home. Please note that the bonus cannot be used towards a buy to let property – even if it is your first property purchase. You must save at least £1,600 yourself as the minimum government contribution is £400. You can put up to £1,000 in the ISA when you open it.

When will they be available?

The ISAs will be available from autumn this year and the scheme will be available for 4 years from then. If you open an ISA within the scheme time, you can keep saving for as long as you want and keep the money in the account until you are ready to use it. You will get the bonus when you come to buy your first home and you will be able to withdraw money during the period you are saving if you want to.

As you can only put a maximum of £1,000 into the ISA, and can only save £200 per month, the earliest time at which you will be able to get the full bonus is 4 ½ years from opening the account.

The bonus will be available for house purchases in London of up to £450,000 and £250,000 outside London.

More information

For more information about first time purchases, or any other property matter, please contact our property department on 0114 358 9009 or email property@graysons.co.uk. You can also find lots of useful information on our property law pages.

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