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Help to Buy ISA: How does it work?

Wednesday, June 08, 2016

Launched in December 2015, the government’s Help to Buy ISA initiative is a great way to take your first step on the property ladder. By saving money into the ISA, the government will boost any savings by up to 25%.

What is an ISA?

An individual savings account (ISA) is extremely useful for individuals looking to invest a certain amount of money each year, and receive interest without having to pay tax.

The ins and outs

In the first month of saving, you are able to invest up to £1,200 and up to £200 for every month thereafter. For every £200 you save, you will receive a government bonus of £50.

To be able to claim your bonus, you need to have saved a minimum of £1,600, which would in turn grant a bonus of £400. The maximum government bonus you can receive is £3,000 – to receive that, you need to have saved £12,000.

The Help to Buy ISA bonus is available on property purchases of up to £250,000, or up to £450,000 in London, and the bonus is paid out when you buy your new home. Unlike some other government schemes, you’re not restricted in terms of having to buy a new build; any property works.

The good news is that there’s no formal agreement to committing to any of these sums. So if you can’t afford to save £200 every month, or if there are some months when you’re in a position of not being able to invest any savings, that’s no problem at all.

One thing to remember; because this is a cash ISA, it means you cannot invest money into another cash ISA within the same tax year, so it’s important to think about how this might affect your ISA limits if you already deposit savings into an existing ISA.


Help to Buy ISAs are available to anyone over the age of 16 who may be thinking of purchasing a house at some point in the near future. You can open one anytime between 1 December 2015 and 30 November 2019 and you'll still get the bonus added as long as you use it for a deposit until 2030.

The accounts are available to every first time buyer, and are not allocated based on household. Therefore, if you are planning on buying with your partner you are both entitle to an ISA account (and a total government bonus of £6,000).


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