Help to Buy ISA

Phaelok

Hi all,

I am currently saving for my first house and have £25,000 in different accounts and do not hold an ISA. I can comfortably save £1500 a month and will be looking to put a deposit down in the next year or so.

I notice that later in the year there is a new government initiative to help people put down a deposit on their first home with the Help to Buy. Is this worth taking advantage of if I have a deposit already? One of the flaws I see with this product is that if I wait up to four years, assuming I can only deposit £200 per month and cannot overpay, house prices will presumably go up by then?

MARTYM8`

That is always the risk – who can say as it depends where you buy?

You can make an initial £1,000 deposit – and assuming it starts on 1 December – have paid in £1,000 (£200 x 2) by next April. This would qualify you for a £500 top up – payable of course not to you but to your mortgage lender. Note that – you don’t get the money from the taxpayer – your bank/building society does!

So you don’t have to wait 5 years to use the HTB ISA – but the longer you save the more you (or your bank) gets.

The HTB ISA should be seen as a marginal bit of help - it shouldn't determine when you buy unless you live in an area where £3k is a material sum relative to house prices.