Help to Buy ISA: Beware of this key deadline or risk crushing your homeownership dreams

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The Help to Buy ISA is designed to assist budding first time buyers in getting on the property ladder. The scheme was designed by the government and offered Britons a set window of time to open an account and take advantage of this method of assistance. The scheme finally closed to new applicants in November 2019, although for those who did open an account, it is still possible to make savings through this method.

Savers who are continuing to use the Help to Buy ISA, however, should bear one particular deadline in mind. 

This could affect both how Britons put away money, the availability of the government bonus.

Under present Help to Buy rules, there is a limit to the amount of time people can spend saving.

The important deadline to bear in mind is November 30, 2029, after which is will no longer be possible to save through this method.

And the government bonus can only be claimed until November 2030 – important as it is this incentive which led many to open a Help to Buy account in the first place. 

One of the key benefits of saving into a Help to Buy ISA is the government bonus of 25 percent on the savings, up to £3,000.

But the Help to Buy ISA bonus has to be claimed only when it is certain the saver is buying a house.

This means a transaction must be going ahead, with a conveyancer or solicitor claiming the bonus between exchange and completion.

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A Help to Buy ISA can be used with any kind of mortgage, in an effort not to restrict those saving towards the purchase of their first home.

For those looking to capitalise off the bonus, the highest amount which can be received from the government is £3,000. 

This means to receive the total amount from the government, savers will need to have put away £12,000 into their ISA.

However, once savings have reached the minimum amount, Britons can claim the government bonus at any time. 

If purchasing the property as a couple, where both are first time buyers, then two Help to Buy ISAs can be used.

However, there are also important issues to bear in mind for the type of property a person or a couple is purchasing.

The home is required to have a purchase price of up to £250,000, or a higher £450,000 if in London.

It must be the only home a person owns, and be where they intend to live – so the property cannot be rented out.

Savers are also not permitted to have more than one of this kind of ISA so should be careful with their savings. 

It is worth noting, however, that the government has relaxed one Help to Buy rule as a result of the COVID-19 crisis.

The rule is designed to assist in the building of new homes, to enable thousands of families to continue to benefit from the scheme.

An announcement from the government read: “The deadline for the homes to have been finished in order to comply with the equity loan scheme has been extended to ensure customers do not miss out if there has been a delay in construction due to the pandemic.

“Under the current scheme, new homes would need to have been finished being built by the end of December.

“The extension will mean the deadline will now move to February 28, 2021, helping thousands of customers to get the keys to their new home.

“The deadline for the legal completion of the sale will remain the same – March 31, 2021.”

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