The HTB ISA closed to new accounts on the 30 November 2019.
Any first-time buyers who opened a HTB ISA can continue to save into that account until November 2029. If two first time buyers are buying together they can combine the bonuses received for their purchase.
With this type of account, the Government will boost the first time buyer’s savings by 25% so for every £200 saved a Government bonus of £50 is paid. The maximum bonus is £3,000.
Potential first-time buyers can save up to £200 a month into the HTB ISA however to kickstart the account the first-time buyer was able to deposit a lump sum of up to £1,600 into the account.
The minimum bonus for a HTB ISA is £400 which means that the first-time buyer must save at least £1,600 in the account.
To qualify for the bonus the property must :
- be in the UK;
- be a purchase price of up to £250,000 (or up to £450,000 in London);
- be the only home the buyer will own;
- be where the buyer intends to live; and
- be purchased with a mortgage.
Where a buyer is close to exchange of contracts the solicitor or conveyancer will arrange for them to make a first-time buyer declaration and arrange for the first-time buyer to close their HTB ISA account and be supplied with a copy of the HTB ISA closing statement from the account provider.
The solicitor or conveyancer will then upload the closing statement and the first-time buyer declaration and make the application on the Government’s website to claim the bonus. The bonus is paid into the client account of the solicitor or conveyancer acting for the first-time buyer in time for completion.
The bonus must be added to the money the first-time buyer is putting towards the property. The bonus cannot be used for the deposit due on exchange of contracts, to pay for a solicitor’s fees or any other indirect cost associated with buying a home.
Once the property is registered in the name of the first-time buyer at the Land Registry the solicitor or conveyancer will need to upload a copy of the Land Registry entries onto the Government’s website.
Lifetime ISA (LISA)
First-time buyers can use a lifetime ISA to purchase their first home or to save for later life. You must be 18 or over but under 40 to open a LISA.
You can put in up to £4,000 each year until you are 50 into a LISA.
The Government will add a 25% bonus to that account up to a maximum of £1,000 per year.
A first-time buyer can withdraw money from the LISA to buy their first home or if they are aged 60 or over or are terminally ill with less than 12 months to live. A 25% charge is made if cash or assets are withdrawn from the account in any other circumstances as a way of the Government recovering the bonus paid.
To use a LISA for the purchase:
- the buyer needs to be a first-time buyer;
- the property will need to cost £450,000 or less;
- the money must not be withdrawn until 12 months after the account is open;
- the buyer needs to use a solicitor or conveyancer for the purchase as the ISA provider will pay the funds directly into the solicitor or conveyancer’s account; and
- the buyer must buy the property with a mortgage.