The Help to Buy ISA is an incredibly popular scheme that’s captivated home owners since its launch. However, on the 30th November 2019 this widely used ISA will close to new applicants; having helped more than 196,000 people purchase their first property, this will end the 25% bonus that’s been on offer to potential home-owners.
With thousands of house hunters now rushing to the bank, it seems this announcement has caused a national fluster… but should you be running out the door, or are there better options available to you? It’s important to consider your lifestyle and needs before you sign up. With the government’s closest alternative rising in popularity, the Lifetime ISA appears to bring with it an abundance of benefits, you just need to decipher which scheme best meets your requirements.
To help you better understand which ISA you need, Granville Developments’ Managing Director, Matthew Firth, outlines the core points for consideration:
“The Help to Buy ISA was created for first-time buyers, aged 16 and over. If you’re looking to buy your first home, worth up to £250,000 (or £450,000 in London), then you should consider signing up. Requiring an initial deposit between £1 and £1,200, saving up to £200 every month thereafter, it provides a helpful boost to your savings without breaking your monthly budget. Although, for the maximum £3,000 you do need to save £12,000, so it’s best if you’re in it for the long haul!
As a property developer, I have more knowledge surrounding what you can get for your money as opposed to finances themselves. Help to Buy ISAs can only be used to purchase new-build homes, something that I certainly wouldn’t view to be a limitation; I build these properties for a living so I can vouch for the high quality we deliver. Plus, with a new build you can work with your developer to add your own touches, something that can’t easily be achieved with older properties unless you’re prepared to pay extra for refurbishments. If you’re a young person looking to put your own stamp on a property, the Help to Buy ISA could be for you.
Meanwhile, the Lifetime ISA (LISA) is suited to those who hope to buy a home in no less than 12 months’ time (Lifetime ISA funds can only be used for property purchase after 12 months of opening the account). Saving £4,000 a year becomes £5,000 with the Lifetime ISA bonus, a small but helpful increment if you’re in a hurry.
If you’re opening a LISA, be aware that you can face a 25% penalty for withdrawing your funds for any other reason than buying a home, bar retirement. If you’re certain you want to buy a home, or invest in your future, then this could be a good fit for you. Our developments usually generate interest when people see them being built; if you’ve seen the plans for a new build that appeals to you, now could be the perfect time to open an account, just in time for their completion!
If you’re considering which scheme is for you, speak with a variety of professionals. From mortgage advisers to developers, we’re all here to help.”
For more information about Granville Developments, visit www.granville.co.uk