Help to Buy ISA Proves Popular
In the first week of Nationwide's release of their Help to Buy ISA, 7,000 accounts were opened. With this in mind, it appears that the Help to Buy ISA, which has just been extended to London properties, has hit the ground running. So, how does the Help to Buy ISA work, and how beneficial is it?
How Does a Help to Buy ISA Work?
The government scheme came into force from 1st December, and allows those who set up a Help to Buy Isa to receive a 25% bonus on the amount they save.
You must be a first time buyer looking to make your first move onto the housing ladder, and you're only able to open 1 account for the duration of the scheme. The maximum you can save each month is £200 – for this amount the government would add £50. The most the government will add is £3,000 to a total of £12,000 savings, and the bonus is added when you are ready to buy your home.
Your savings will go on the mortgage for a property worth £250,000, or up £450,000 in London.
Help to Buy ISA's are available through high street and online banks or building societies that offer ISA products e.g. Nationwide, Santander, Halifax and Virgin
to name a few. The interest rates may vary between providers, so do your research if you're planning to open one!
How Helpful is the Help to Buy?
With so many people taking advantage of this opportunity since its introduction, it's clear that many people have high hopes of being able to use the bonus from the government to buy their first home. But, will they able to once they've saved the cash?
The boundary between what is or isn't classed as London is clear cut for the purposes of the Help to Buy ISA. Those who fall just outside of the boundary still face the challenge of inflated house prices, yet aren't able to make use of the higher £450,000 threshold. For example, in Addlestone the average house price is £335,000 – but this doesn't fall into a London borough. It's also probable that house prices may grow in the coming years, making it harder to purchase within the limits.
In a housing market that sees many first time buyers struggling to get a foot in the door, the Help to Buy ISA comes as a welcome opportunity, but it will be interesting to see how many people will be able to benefit from the scheme.Our Conveyancing Solicitors at Simpson Millar keep up to date on all aspects of residential property law, and will be here to help should you need straightforward support with buying your first home.