Is the Help to Buy ISA still available?

If you have a Help to Buy ISA, you can get a 25% government bonus towards your first home. But can you still open one? Karl Talbot finds out.

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The Help to Buy ISA launched back in 2015. It allowed first-time buyers to save up to £200 per month, with the government paying a 25% bonus towards purchasing a home. The product was a big hit. More than a million accounts were opened within the first two years.

So what does the scheme look like today? And if you have a Help to Buy ISA, can you still get the bonus? Here’s what you need to know.

Can you still open a Help to Buy ISA?

The short answer is no. The Help to Buy ISA scheme closed to new applicants in 2019.

However, if you opened an account before the scheme closed and you still have it, you can continue to pay in up to £200 per month until November 2029. You then have a further year to claim the 25% bonus towards buying your first home.

And while you can no longer open a new account, you can still transfer an existing account to another provider. This freedom means that you won’t be stuck if your current provider decides to chop its interest rate. And remember, as it’s an ISA, any interest you earn in the account is tax free.

What are your options if you have a Help to Buy ISA?

If you have a Help to Buy ISA, you can continue to pay in up to £200 per month. You just need to be fairly confident that you’ll purchase a property before the end of 2030 to get the bonus.

If you don’t end up buying a home, or you have a change of plans, it’s not the end of the world. That’s because you are allowed to make withdrawals from your account at any time.

However, if you do withdraw a lump sum, then be mindful that you won’t be able to easily replace it in future, as you can only deposit a maximum of £200 each month. So, if you take out £5,000 from your account in one go, it will take you more than two years to replace this via monthly £200 increments.

With the Help to Buy ISA, it’s also worth bearing in mind that the maximum bonus is capped at £3,000. This means that there’s little point in saving more than £12,000 in the account, as you won’t get a 25% top-up on anything you save above this.

What are the rules on qualifying for the bonus?

You will only get the 25% bonus towards buying a first home if you intend to live in it. In other words, you can’t use the Help to Buy ISA to purchase a home to rent out.

Furthermore, in order to qualify for a bonus, the property you are buying must cost no more than £250,000, or £450,000 if buying in London.

If you do qualify for the bonus and you’re buying with a partner, there’s nothing to stop you from claiming two bonuses. That’s as long as you both have an account and you are both first-time buyers. This means it’s technically possible to bag a £6,000 bonus if you’ve both saved the max in separate accounts.

On a similar note, if your partner qualifies for a Lifetime ISA bonus, they can use this alongside your Help to Buy ISA bonus.

When do you get the bonus?

When you buy your home, you must get a legal representative to apply for the bonus for you. They can charge up to £60 for this service.

Once done, you’ll get your bonus on completion.

Can you transfer a Help to Buy ISA into a Lifetime ISA?

Yes, you can. However, before doing so, it’s important to understand the differences between the two products.

A Lifetime ISA is available to those aged 18-39. It pays a 25% bonus towards your first home or your retirement when aged 60+.

You can save up to £4,000 per year in it, compared to £2,400 in the Help to Buy ISA.

However, unlike the Help to Buy ISA, you must pay a withdrawal penalty if you don’t use your savings to either purchase a first home, or for your retirement.