From 1st December 2015, first time buyers are being offered a helping hand by the Government to get on the housing ladder by way of a Help to Buy ISA.
The scheme will encourage first time buyers to save for their deposit using dedicated ISAs and will provide a bonus payment of 25% of the amount saved toward the purchase of their first home. The maximum bonus that a first time buyer can receive is £3,000.
Who can qualify for a Help to Buy ISA?
The scheme is only available for eligible customers and can only be used in the purchase of an eligible property.
The eligible customer must sign a declaration that they qualify for the scheme, which includes the following requirements:
- The customer must be a UK resident for tax purposes
- The customer will never have owned or held any interest either in the United Kingdom or elsewhere in a freehold, leasehold or commonhold property
- The customer must have not already received a bonus payment under the Help to Buy: ISA Scheme
- The customer must not pay more than the maximum monthly allowance into the Help to Buy: ISA Account
- The customer may only ever hold one Help to Buy: ISA Account
How does the Help to Buy ISA scheme work?
The first step in getting a Help to Buy ISA is to decide which ISA to go with. It is assumed that most banks and building societies will embrace the scheme but Halifax, Nationwide, Natwest, Lloyds and HSBC have all announced their Help to Buy: ISA rates.
You should apply to your Help to Buy: ISA Manager through your chosen bank or building society who will assess your eligibility for the scheme. Once approved you can choose to make a one-off payment of up to £1000.00 into your account in the first month and then up to a maximum of £200 per month thereafter on a regular basis.
You can save as much as you like; however, a bonus will not be paid until your savings reach over £1,600. The bonus will only be calculated on savings up to a maximum of £12,000, so any savings above this will not qualify for the bonus.
Once you have saved the necessary amount for your deposit and found a property to buy you can appoint a Solicitor or Conveyancer to carry out the legal process for your purchase. Your Conveyancer will ask you to sign the necessary declaration and forms for the draw down of the bonus.
You will need to close your Help to Buy: ISA before exchange of contracts and obtain your Account Closing Documents from your bank or building society. This is important as your solicitor will need these to calculate your bonus entitlement and to request the bonus payment.
Prior to the completion of your purchase, your solicitor will request your deposit from you and will arrange to draw down your bonus entitlement into their client account. Your mortgage will make up the balance of the monies which will be paid to the seller on the completion date.
How can we help?
Nelsons offers a full range of legal property services and is happy to help in any aspect of buying or selling property.
Our conveyancing fees are competitively priced and we aim to provide the highest quality of service to make your home move as smooth as possible. Contact us directly for more information or telephone 0800 024 1976.