Homebuyers have only six weeks left to sign up to the Help to Buy ISA saving scheme. This scheme involves a bonus of 25% from the government when you buy your first property.
The Help to Buy ISA has paid people an average bonus of just under £900 since it began in 2015.
However, it won’t be possible to sign up to it after the 30th of November 2019.
You actually have another 10 years (until 30th Nov 2029) to keep saving into it and up to 1st December 2030 to claim your bonus.
Help to Buy ISA – how it works
A range of banks, credit unions and building societies offer the scheme, helping you buy a home worth up to £250,000, or £450,000 in London.
For every £200 you save, the government will reward you with a bonus of £50. Anyone over 16 can open an account and save up to £200 per month, and a lump sum of up to £1,200 in the first month.
The minimum bonus amount you can receive from the government is £400, after saving £1600 in the account. While the maximum amount you can receive is £3000; by saving £12,000 or more.
The Help to Buy ISA has actually been much less popular than first expected. The Office for Budget Responsibility initially predicted the government bonus payouts to be £823m in the year 2019/20. However, the forecast has now been sliced to just £150m.
Despite the underwhelming uptake of the scheme, Sue still thinks it should continue to be available to people.
She said: “It’s bad news that it’s coming to an end because it’s a brilliant savings scheme for first-time buyers.”
Is there any alternative support for first-time buyers?
Once this scheme has expired in November, you first-time buyers will probably be looking for help elsewhere.
Fortunately, there are other systems in place to help you save up for your first home.
The Lifetime ISA is available for 18-39 year-olds to open and offers help buying your own place for the first time. It allows you to save up to £4000 each year, receiving a bonus of up to £1000. You can keep saving in this account until you’re 50.
You can claim the bonus if you either use it as a deposit for a first home worth up to £450,000, or leave it untouched and save it until you’re 60.
A difference between the Lifetime ISA and the Help to Buy ISA is when exactly you receive the bonus.
With the Lifetime version, you get the government bonus once you put down a deposit. Yet the Help to Buy ISA doesn’t grant you the money until you’ve fully paid for the house. So, taking this into consideration, the Lifetime ISA could be more helpful for first-time buyers as they may be struggling to get that initial deposit down.
However, don’t waste your energy rushing into a Lifetime ISA now if you’re hoping to move within the next 12 months; you can’t qualify for any bonus until the account has been running for over a year.