Everything you need to know about ISAs, what they mean for you and how you can cash in your bonus!
Help to Buy ISAs
Help to buy ISAs were introduced in 2015 to help first time buyers build up a deposit for their first home, applications to open Help to Buy ISAs closed in December 2019, but you can pay into the ISA until November 2029 and claim the 25% bonus until November 2030.
If you opened your ISA before December 2019, you can contribute up to £200 per month with will earn you a 25% government bonus of up to £600 per year. The maximum saving amount is £12,000 meaning the maximum bonus you can claim is £3,000 per person. If you are buying jointly, you can combine your ISAs and both claim the 25% bonus, if only one party is a first-time buyer, you can still claim one 25% bonus.
The maximum purchase price is £250,000 (or £450,000 in London), if the purchase price exceeds these limits, you cannot claim your 25% bonus back on that property and the property must also be a residential purchase.
You can use the 25% bonus towards your purchase deposit, however, check with your chosen conveyancer around any additional cost for the legal work to redeem this for you.
Similar to Help to Buy ISAs, Lifetime ISAs were introduced as a tool to either save for your first home or to save for later life if not redeemed on a property purchase. You are still able to open Lifetime ISAs with a minimum deposit of £1 providing you are between the age of 18 and 40. You must have made a payment into the account before age 40, however you can continue to pay in until age 50.
Unlike Help to Buy ISAs, you can save up to £4,000 per year and earn a 25% government bonus on top equating to £1000 per year. Saving £4,000 in a Lifetime ISA counts towards your £20,000 annual ISA limit.
You will lose your 25% bonus if you decide to withdraw from the account for any reason other than a first property purchase, are terminally ill with less than 12 months to live or are aged 60 or over, as well as losing any interest gained in this account.
Other things to note with Lifetime ISAs are, the maximum property purchase price is £450,000 and the account must have been open for at least 12 months before you can claim your bonus.
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