The most challenging issue for all 20 to 30 somethings is how to get on the housing ladder. As a country we consider home ownership an essential.
Tax policy is designed to drive behaviour and, as far as housing is concerned, it has worked for those who bought their homes at the right time.
For clients who have children and grandchildren it is a subject regularly referred to as a concern to them as well as the younger family members. Increasingly taxation is being designed to assist, one example of which is the Help to Buy ISA.
What is a Help-to-Buy ISA?
A Help-to-Buy ISA is a government scheme designed to help you save for a mortgage deposit to buy a home. To qualify you must be classified as a first-time buyer and not own a property anywhere in the world.
Savings are tax free just as with any ISA product. However, a Help-to-Buy ISA gives you the added bonus of getting government contributions.
How do Help-to-Buy ISAs work?
The government will top up any contributions you make by 25%, up to the contribution limit of £12,000. So, for every £200 you save, the government will contribute £50. This means you can earn a maximum of £3,000 from the government.
The minimum amount you need to save to qualify for a government bonus is £1,600 (which gives you a £400 bonus).
You can start off your ISA with an initial deposit of up to £1,000 which also qualifies for the 25% boost from the government.
Help to Buy ISAs are available to each first-time buyer, not each home. So, if you’re buying a property with your partner, for example, you’ll be able to get up to £6,000 towards your deposit.