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The Help to Buy ISA - your questions answered

The Help to Buy ISA - your questions answered

If you’re a first time buyer you’ve probably heard about the Help to Buy ISA - it’s a great way to top up your savings for a mortgage deposit. 

But what’s so different about the Help to Buy ISA?  We asked panel members Scott Fowler Solicitors to provide our readers with some need-to-know information.

Scott Fowler Solicitors has 50 years of conveyancing experience and many of their customers have used the Help to Buy ISA to help with their house purchase.  Here’s some of the most frequently asked questions they’ve had about it:

What is a Help to Buy ISA?

The Help to Buy ISA was launched as a method of assisting first time buyers through a cash bonus to assist with the purchase of a property. The scheme allows buyers to deposit an initial balance of up to £1200 into a Help to Buy ISA and up to £200 each month thereafter. In return the government will provide a 25% bonus (capped at £3000) which will be claimed by the conveyancer or solicitor on completion.

To be eligible the property must be valued at £250,000 or less (£450,000 or less in London), be the only home you own (or have owned) and your domestic residence following completion.

How is the bonus claimed?

Your solicitor or conveyancer will claim the bonus on your behalf on completion and the monies will be sent directly to them. To be able to do this they will need you to close the account and send to them the final account closure statement you receive from the bank a minimum of 5 working days prior to completion.

I am buying with someone else – can we both have accounts?

Yes! You will both need to meet the eligibility criteria however you can both open an account and the bonuses can be used towards the same property.

What can I use the bonus for?

The bonus is used towards the mortgage deposit (not the exchange deposit). You will still need to save the deposit to be able to exchange contracts. Your conveyancer or solicitor will then request the bonus for the date of completion to be put towards the purchase.

What happens if the bonus isn’t claimed?

The bonus must be claimed for the date of completion. The bonus cannot be claimed after completion and if it is not, it will be forfeited. It is therefore crucial your conveyancer or solicitor has the account closure statement from you at least five working days prior to completion.

Equally the bonus must be claimed within 12 months of closing the account so you should only close your account if you are confident you will complete during this timescale.

Can I have a cash ISA and Help to Buy ISA?

You cannot pay into a cash and Help to Buy ISA in the same year although you may be able to open a Help to Buy ISA if you already have cash ISA’s from previous years. It is worth talking to a financial advisor or your bank to see whether you can have both open at once.

Can I take the money out again if I decide not to buy?

You can withdraw the monies in a Help to Buy ISA at any time however you will not receive the bonus unless you are requesting a final statement from your bank as part of the account closing process to buy a property.

You can find more information about the Help to Buy ISA and a list of providers offering it on the government's website here.