Climbing the First Time Buyers Ladder before it’s too late!

In this day and age, the ever-increasing cost of living combined with the relatively static rates of pay make it increasingly difficult at the best of times for us to flood our savings account with the finances needed to earn even the slightest amount of interest.

Even for those with the ability to make regular deposits into our savings account when circumstance allows, for some of us owning our own home is about as much of a dream as removing the 31st day of October from this years’ calendar.

The 1st of December 2015 paved the way for a  tax-free incentivised facility to assist first time buyers in their climb up the Property ladder, the Help to Buy ISA (‘HTBI’). This tax-free ISA came with the added extra of a monetary bonus from the Government depending on the amount saved. Upon opening a HTBI an initial balance of £1,200.00 could be deposited in your first funded month, immediately raking in a bonus of £300.00. For each remaining month a maximum of £200.00 could be deposited in the account, with each monthly deposit accompanied by a £50.00 bonus. Monthly deposits of this amount could be made until such time the maximum bonus of £3,000.00 was obtained. If for some reason you wanted to draw down funds beforehand you were permitted to take your money out at any point but your closing balance must be at or above the minimum £1,600.00 to receive the minimum bonus.

This year however saw the announcement that the HTBI was no longer going to be available from the 30th November 2019 however if you open an account before then you may keep it providing your bonus is claimed before the 1st December 2030. The great news is you do not need to make a deposit of funds when opening your HTBI therefore you can get your account open before it’s too late and start depositing funds as soon as you have them available (please note this is dependent on the chosen bank).

If you are unable to open a HTBI before the deadline fear not, there is an alternative facility available to you. This facility is known to some as Lisa – or a Lifetime ISA (‘Lisa’). This alternative support is available to those aged between 18 – 39 and carries similar rewards to that of a HTBI. With Lisa for every £4.00 you save you will be awarded a £1.00 meaning by saving £4,000.00 a year you could be rewarded a hefty £1,000.00 to help you up that Property ladder along with any interest acquired – tax free! Unlike the HTBI there is no limit on the deposits you can make meaning bigger bonuses however your LISA must be opened for at least a year before you can obtain your bonus.

As if the announcement of the end of HTBI’s wasn’t worrying enough, it was also announced that the Forces Help to Buy ISA (FHTBI) was also taking a halt from December 2019. This scheme, established in 2014, allowed qualifying service men and women to borrow up to half of their salary interest free (up to a maximum of £25,000.00) to assist in the purchase of their first home. Although this type of ISA is in line to be quashed from December 2019 there are rumours circulating that this scheme may be replaced with one of equal benefit and support – keep your eyes peeled!

Both the LISA and HTBI carry benefits of equal nature but the most appropriate ISA will be dependent on your personal circumstances. If you want to save to buy a Property quickly the HTBI may be more suitable to you due to the ability to draw down your bonus at any point providing your balance is at the or above the minimum balance. If you are looking to save for a longer period and are in no rush LISA may be more suitable to you as the restricting 12-month period is unlikely to cause an inconvenience and the higher bonus may be worth the wait. Alternatively, if you are a service personal you have the choice of either of the three however regardless of the type of ISA you decide to open they all come with one common enticing bonus – free cash!

Don’t forget however the closure dates are fast approaching and it’s important you get your ISA opened and begin the climb before it’s too late!

If you wish to discuss the above please contact us on 01752 827915.