Help to Buy ISAs are intended to help people get on the property ladder with greater ease. The scheme was designed by the government to assist first time buyers with a purchase, and was widely taken up. While Help to Buy ISAs closed to new applicants in November 2019, it is still possible to make savings through this method.
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Under Help to Buy rules, savers who do have an account have until November 30, 2029 to save into it.
Once this deadline expires, first-time buyers then have another 12 months – until December 1, 2030 – to claim their bonus.
To be eligible for a bonus, a saver must have put away at least £1,600 into their ISA.
After this, 25 percent of the savings up to a maximum of £3,000 can be added on top in a well needed boost for first-time buyers.
However, when a person comes to claiming their extra bonus from the government there may be a fee they have to meet.
In order to receive the bonus, the buyer must instruct their solicitor or conveyancer to apply for it.
This is done when a person is imminently purchasing the home.
Once the bonus is received, it is then added to the money the buyer is putting up towards the home.
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This is the point where a charge is likely to kick in.
Processing the government bonus application takes additional work, and so conveyancers or solicitors are permitted to charge a fee.
However, the maximum they can charge is £50, plus VAT, so this cost is limited.
The Help to Buy website states: “The bonus must be included with the funds consolidated at the completion of the property transaction.
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“The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.
“Your solicitor or conveyancer cannot charge more than £50 + VAT to process your bonus application.”
For every £200 a person saves into a Help to Buy ISA, they will receive a government bonus of £50.
For savings between £1,600 and £12,000, the government will top these up by 25 percent, but for savings over £12,000, the government tops this up by £3,000.
When purchasing a property, there are also certain requirements which need to be fulfilled.
The home must have a purchase price of up to £250,000, or £450,000 in London, and it must also be the only home a person owns, and be where they intend to live.
Help to Buy ISAs cannot be used if a person intends to rent out the property, and savers are not permitted to have more than one of this kind of ISA.
Once savings have reached the minimum amount, savers can claim their government bonus at any time.
Interest rates on Help to Buy ISAs vary from provider to provider, so it is important for existing savers to monitor this.
However, there is no interest earned on a government bonus, because the money is not received until a property is purchased.
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