Following the Chancellor’s announcement in March, some 55% of respondents to the Mortgage Solutions poll said they will be advising first-time buyers to partake in the scheme.
George Osborne’s scheme will allow first-time buyers to save into the ISA from autumn, in which the government will provide a £50 bonus for every £200 saved up to a maximum bonus of £3,000 on £12,000 of savings.
The announcement has been met with mixed reviews. There are concerns that the amount saved during the course of the scheme will fail to keep up with house price growth. Calculations published last week by Fidelity Personal Investing found that first-time buyers using the ISA would be left with a £14,000 shortfall.
Charles Haresnape, managing director, mortgages and commercial lending at Aldermore, said it could take first-time buyers some time to gather the savings for a deposit in light of current house price levels.
He added that clients should seek advice from investment-qualified advisers who would be able to offer borrowers a range of similar options that mortgage-only brokers would not be able to advise on.
“Any advice should be from investment-qualified advisers not mortgage only advisers as this is not the only way to save for a mortgage,” he said.
“Again it is a useful initiative but this does not escape the fundamental point that more house construction is required to ensure housing can be affordable for first time buyers. We should also note that renting is increasingly becoming the housing of choice for many people and therefore the ISA will not necessarily appeal to all potential households.”
Labour announced its own plans for the Help to Buy ISA in a speech by party leader Ed Miliband over the weekend. Miliband pledged to funnel savings generated by participating banks and building societies into a fund to build 120,000 homes for first-time buyers over the term of parliament.
Matthew Graves, managing director of Linear Financial Solutions, added: “The most you can save in the scheme is £200 per month and therefore it will take until 2020 to save the maximum £12,000 and get the £3,000 government addition. Who knows how high house prices could have gone by then, so with a capped level of saving, it is unlikely that people will be able to save fast enough to keep up with average house prices.
“The Help to Buy ISA still falls under the current ISA rules – meaning an account holder cannot have more than one cash ISA per year. However, if two people are planning to buy a home together, they can have one Help to Buy ISA each – meaning they could receive a total of £6,000 in bonuses.”
