There’s thousands of pounds of free cash available for first-time buyers towards a new home, yet the easiest, simplest way to get this – a Help to Buy ISA – closes to new applicants on 30 November. So put £1+ in now or risk missing free £1,000s.
This only applies to first time buyers, defined as someone who has never owned or part-owned a property anywhere worldwide.
As ISAs are individual products you can do it even if you’re buying with someone who’s owned before. If two first timers are buying together, you can have one each. The Help to Buy ISA deadline.
If you want a Help to Buy ISA, go quick as the final deadline’s 30 November. However provided you open it by then the facility, stays open for 10 years, so you can keep putting money in and getting the bonus (and if you don’t use it in ten years you can just withdraw the cash).
Is a Help to Buy ISA better than a LISA?
Er, well, it depends. There’s no one size fits all, both have strengths and weaknesses. Here’s a brief summary…
H2B ISAs are open to more people. You just need to be aged 16+. To open a LISA you need to be age 18-39, so those 40+ should open a H2B ISA while they still can.
LISAs bonus can be £1,000s bigger. You can save far more in LISAs – up to £4,000 each tax year (as a lump sum or when you can) – and the bonus will be paid monthly until you’re 50. With H2B ISAs you can save max £1,200 in the first month and up to £200/month after, getting the bonus on up to £12,000.
LISAs lets you buy a bigger property. Both can be used for a mortgage on any residential property, up to a set value. The H2B ISAs limit’s £250,000 (£450,000 in London), for LISAs it’s £450,000 everywhere.
H2B ISA bonus can be triggered faster. You need £1,600+ saved, which is doable in just three months. Yet LISAs only pay the bonus if they’ve been opened a year or more (consider opening a LISA with a £1 now, to start the clock).
H2B ISAs let you withdraw penalty-free. So if you’re not sure you’ll buy a house, they’re a no-brainer.
Yet with LISAs you pay 6.25 percent penalty to withdraw cash unless it’s for a home or you’re age 60+.
H2B ISAs have better interest rates. For full updated best buys go to www.mse.me/HelptoBuyISA and www.mse.me/LISA. Though if a LISA is right for you, its bigger bonus usually makes up for the lower interest.
So in a nutshell…
If you’re aged 18-39, will definitely buy a home costing under £450,000, can max out the savings and won’t buy within a year, go for a LISA, as you will get a bigger bonus.
If you’re older, need to buy quickly, aren’t saving that much, or aren’t 100 percent sure you’ll buy at all, it’s safer to stick with a H2B ISA.
If you’re not sure, open both with £1+ (if you can, put more in a Help to Buy ISA as you’re allowed to put £1,200 in the first month and you can withdraw it at any time).
This gets a foot in the H2B ISA door before the 30 November deadline, and gets the clock ticking on the LISA’s ‘one year before withdrawal’ rule.
Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 13 million people who get his free Money Tips weekly email, go to www.moneysavingexpert.com/latesttip