Help to Buy ISA’s – Get yours before it is to late!
Help to Buy ISA’s – Get yours before it is to late!
The countdown has well and truly begun to the demise of the Help to Buy ISA, as the Government calls an end to the cash saving product that had a generous government boost attached to it. Get yours set up before they go!
From the 30th November 2019, the Help to Buy ISA will be closed to new customers and replaced by the Lifetime ISA (LISA) savings product which will have a lower interest rate attached to it. The Help to Buy ISA is a great product, so we would advise you speak to our advisers’ todays to get one set up before the closing date. The main benefit of the Help to Buy ISA is the 25% bonus towards your house deposit which was paid by the government to you. For Example, if you saved £12,000 in the ISA (this is the maximum you can save) the government would give the First–Time home Buyer and extra £3,000 to add to their deposit.
It is the lack of competition with the LISA that has hit the savers the most, with only a handful of providers offering this product, compared to the range of Help to Buy ISA products being offered by banks and building societies across the UK. The biggest benefit of the Help to Buy ISA compared to the LISA is the rate of interest. LISA are only offering 1.1% whereas the Help to Buy ISA is offering a competitive 3% rate of interest.
See below a range of difference between the LISA and the Help to Buy ISA.
– It should also be noted that, if you are looking to buy a house in the next year then the Help to Buy ISA is the best pick for you. This is because the LISA can’t be used within the first 12 months of opening the account.
– If you don’t find a house and you wish to withdraw your money from your Help to Buy ISA, you will face no penalty. If you want to withdraw cash from your LISA before you turn 60 you will face a 25% government withdrawal charge, meaning you could get back less than you paid in.
– Help to Buy ISA limits the property price of your first home to £250,00 or less but can rise to £450,000 if the property is in London, whereas the LISA is set to £450,000 regardless of the location.
– You need to be 16 years old to open a Help to Buy ISA, and cannot previously owned a property, with a LISA you need to be aged between 18 and 39 and like the Help to Buy ISA you cannot previously owned a property to benefit from the government bonus.
– The Help to buy ISA must be used to purchase a home, whereas the LISA can be used to save towards either your retirement or buying a home. You can save up to £4,000 per year in your LISA compared to the £3,600 in your first year of the Help to Buy ISA then £2,400 max per year after.
Give us a call today on 028 9332 2822 to get your Help to Buy ISA set up well in advance of the government closing date – 30th November 2019. Or to alternatively discuss your options with us so we can help you pick the best saving product for your personal needs.
Source: Financial Times & https://www.onefamily.com/lifetime-isa/first-time-buyers/help-to-buy-comparison/