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Essential Q&As on Help to Buy ISA

What is Help to Buy?

Help to Buy is a Government-backed scheme to allow first-time buyers and low earners to purchase a home. Introduced in April 2013, so far it has helped around 300,000 people to get on the property ladder. Currently it has funding of £10 billion that will allow it to run until at least 2021.

What are the different options?

There are three Help to Buy options: equity loan, Help to Buy ISA and shared ownership.

The equity loan is a loan of up to 20 percent of the purchase price of a property (40 percent in London), which is interest-free for the first five years. After that, you pay interest on the loan of 1.75 percent annually, rising by 1 percent above the rate of inflation every year after that. The interest payments do not reduce the loan amount. Instead the loan is repaid when the house is sold or the mortgage is repaid, whichever comes first.

A Help to Buy ISA lets you save money tax free for a deposit and the Government will boost your savings by 25 percent. For example, for every £200 you save, you get a bonus of £50. The maximum bonus you can receive is £3,000.

Shared ownership allows you to buy up to 75 percent of a newbuild or second-hand property and pay rent on the remaining share. When you can afford it, you can buy further shares in your home, a process known as staircasing.

Am I eligible for a Help to Buy ISA?

To qualify for a Help to Buy ISA, you must be aged 16 and over with a valid National Insurance number. Only UK residents can have an ISA. For this particular ISA, you must be a first-time buyer and not own a property anywhere in the world.

You cannot have another active cash ISA operating in the same tax year as a Help to Buy ISA.

You can use the Help to Buy ISA in conjunction with other Help to Buy schemes, such as equity loan and shared ownership.

How do I qualify for the Government bonus?

To earn the tax-free Government bonus, the property you intend to buy must be in the UK and have a maximum purchase price of £250,000 (£450,000 in London). This must be the only home you own, you must live in the property and you must be buying with a mortgage.

How do I open a Help to Buy ISA?

Banks, building societies and credit unions across England offer a Help to Buy ISA account.

When do I need a conveyancing solicitor?

Once you have raised enough money for a deposit and found a property to buy, you need to instruct a solicitor to act on your behalf for the purchase. Homeward Legal works with solicitors across England who are expert in dealing with Help to Buy purchases and can give you the precise advice and service needed. Call us on 0800 038 6699 now to find out what we can do for Help to Buy customers.

Free Guides for First Time Buyers

Homeward Legal has put together some handy guides to help you with your first property purchase. Let us know if there is anything we've missed, and as ever, feel free to call 0800 038 6699

Whose advice can you count on
Step-by-step guide to buying
Essential checklist for moving as a first-time buyer
10 things to know when you view a property

Everything you need to know about buying a property for the first time

Essential Q&As on Help to Buy ISA
Declaration of trust/gift – what it is and why you need it
Whose advice can you count on? Ask the experts
10 things to know when you view a property
The First-Time Buyers' Hub - all the advice you need in one place
First Time Buyer A - Z
The DIY Move - what you can do yourself and what you should leave to the experts
Essential checklist for moving as a first-time buyer
Estimated timeline for first-time buyers
Financing a first-time buy
Freehold, leasehold or commonhold – which one are you buying?
Shared ownership explained
Stamp duty – what it is and what it costs
Step-by-step guide to buying
Top tips to get ahead of the competition
The Budget 2017: What we learned
First-time buyers and Stamp Duty: Your questions answered
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The places where first-time buyers will still have to pay Stamp Duty
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