When the Help to Buy ISA was launched in 2015, it was a godsend for first time buyers. It gave renters, who had almost given up hope on scrapping together enough money to fulfil the dreams of owning their own home, a glimmer of hope.
However, as of 30 November 2019 the Help To Buy ISA will be dropped, in favour of the Lifetime ISA (LISA).
But, don’t worry there is still time to take advantage of a Help to Buy ISA before they’re phased out. In fact, Martin Lewis reckons that you could be missing out on up to £3,000 free cash by not opening one.
Can you afford to miss this opportunity?
Martin Lewis’ Help to Buy ISA advice
What is a Help to Buy ISA?
This specialist ISA is available at a range of high street banks, which the Government will top up by 25 per cent.
The founder of MoneySavingExpert says on his website, ‘Newbies have only got until 30 November 2019 to open one. So if you’ll be able to save the max £1,200 for month one by then, do that and open your ISA before the deadline.’
£1,200 is the maximum amount that you can open the account with in a lump sum. After that you are limited to topping it up with £200 a month. However, he adds that even if you don’t have the full amount if could still be worth opening one and depositing just £1 to keep your options open.
The scheme is set to keep paying out the bonus’s until 1 December 2030. So you can take the time to slowly build up the amount to the minimum £1,600 to qualify for the government bonus. As long as you put the money towards a deposit before 2030 you can expect to receive the government top up of at least £400.
What is a Lifetime ISA?
The LISA which will be taking the Help to Buy Isa’s place was introduced in April 2017. It will also give you a 25 per cent bonus on top of what you save. The main difference is that you can save £4,000 a year, almost double what you can with Help to Buy.
However, you need to wait a year before using it to buy a home. So, if you’re looking to buy a home quickly you’ll be better opting for the Help to Buy Isa. If you’re not sure which one will work best for you, the good news is you can open both and decide later.
Martin Lewis writes, ‘They’re a great way to save for older children. If your kids are 16 and over for a Help to Buy ISA ,or 18 and over for a LISA, the bonus means these are a great place to give them money to save in. If you have it.’
You still have six months to open help to buy ISA. Will you be following Martin’s advice?