The Government’s Help to Buy ISA scheme has launched, giving prospective first-time buyers an incentive to save a deposit for a property, while earning tax-free interest.
For every £200 saved into the Help to Buy ISA the Government will top it up by an extra £50, and lenders have been rushing to launch.
Virgin Money is offering 3% and Barclays 2.27%, according to Moneyfacts with a raft of other providers offering lower rates and more expected to be announced over the coming days.
While first-time buyers will benefit from tax-free interest on the money they save into their ISA, the Government boost is paid on purchase of their first home, and it goes straight to the conveyancer to form part of the deposit.
Help to Buy account holders can receive a maximum of £3,000 from the Government if they save £12,000 into their ISA, meaning that joint first-time buyers could potentially receive a boost of £6,000 to their deposit. However only £200 a month can be saved into a Help to Buy ISA, with an extra £1,000 allowed this month to kick-start the savings pot.
Mark Hayward, managing director of the National Association of Estate Agents (NAEA) said: “The Help to Buy ISA is a great initiative and will provide a boost to first-time buyers (FTBs) hoping to make the climb onto the property ladder.
“It seems as though FTBs are at the top of the Government’s agenda following the further helpful initiatives announced during last week’s Autumn Statement.”
A handful of providers released details of their new Help to Buy ISAs over the weekend and Santander, Virgin Money and Newcastle BS announced the details of their deals this morning.
