Looking to become a first-time homeowner? Money Saving Expert’s Martin Lewis has advised people to open a Help to Buy ISA before November.
If you don’t know what one is, it means the government will add 25 per cent to your savings, up to £3000 maximum on savings of 12,000, in order to help you buy your first home.
However, there’s a deadline for applying, as the scheme closes on 30th November.
Martin Lewis has advised people who aren’t on the property ladder to open a Help to Buy ISA with as little as £1, to make sure they don’t miss out on the government initiative.
Writing in his Money Saving Expert newsletter, he said: ‘If you think you’ll need these [the Government top-up] but aren’t sure, just open them. You need £1 in a Help To Buy ISA by November 30 or you lose the opportunity.’
Speaking to Good Morning Britain, he added: ‘The easiest, simplest form of help for first-time buyers to build a deposit closes to new applicants on 30 November – now less than three months away.
‘First-time buyers saving in Help to Buy ISAs get a 25 per cent boost from the state, so each £1,000 saved becomes £1,250.
‘So if you may one day want to buy a home, consider opening one now with £1 or more, as then the facility stays available until 2029.’
The more you have in the account, the more money you’ll end up with, but it’s definitely worth opening one to get you started before you can no longer apply for the scheme.
If you’re not ready for an ISA yet, don’t worry, because the Help to Buy ISA is getting a replacement called LISA (aka Lifetime ISA). However, there are key differences to consider.
The first is that you need to be over 16 to open an ISA, but a LISA can only be opened between 18-39. So if you’re older than 39, definitely open up an ISA.
The Help to Buy bonus is triggered after three months of maximum savings, but a LISA must be open for a year. A LISA bonus is also much bigger than the ISA bonus.
A LISA lets you buy a property up to £450,000 anywhere in the UK, whereas the ISA lets you buy one up to £250,000 (but £450,000 in London).
It’s worth considering both, and doing research before you go ahead and decide which is right for you.