Help-to-Buy ISAs

The Help-to-Buy ISA is designed to help you buy your first home. It is a cash savings account, but works in a very different way from a standard cash ISA.

How it works

You open your ISA with an initial lump sum of up to £1,000, and can then save up to £200 per month (so in the first month you can deposit £1,200 in total). You can miss monthly deposits but you can’t roll them over, so the maximum you can pay in is always £200. You can save up to £12,000 in total (deposits plus interest) and when you complete the purchase of your first home, the government adds a bonus of 25 per cent (so a £12,000 ISA is boosted to £15,000). If you choose not to buy a home you can still take the money you saved up, but you won’t get the 25 per cent bonus.

A couple who buy a home together, each using a maximum Help-to-Buy ISA, would have their £24,000 of savings boosted to £30,000 – that’s £6,000 of free money, or the equivalent of 45 per cent tax-free interest.

Please note that you cannot pay into a standard cash ISA in the same tax year that you pay into a Help-to-Buy ISA.

How long will it take to get the full bonus?

Even if you save up at the fastest rate of £200 a month, it will take you just over four and a half years to save the maximum amount of £12,000, so make sure you plan a long way ahead.

At what point do I receive the government bonus?

This is a crucial point. The government will only provide the 25 per cent top up when you complete your property purchase. This means (unfortunately) that you cannot use the bonus as part of the initial deposit, but only as part of the final completion monies (i.e. the mortgage deposit).  You will not receive the top-up before completion, so ensure you have enough funds to pay the initial deposit without it. Alternatively, your solicitor may be able to negotiate a lower deposit on the basis that you are using a Help-to-Buy ISA.

Shop around

Not all banks will provide this ISA and some will offer less interest than others, so do make sure you search all providers for the best available deal.


Questions to ask a financial adviser:

  • Is a Help-to-Buy ISA the best option for me?
  • Who’s offering the best rate at the moment?
  • How big a deposit am I likely to need?
  • What else can I do to improve my chances of getting a mortgage?
  • How can I raise the funds to complete my purchase, and so benefit from the government top-up?
  • Do I qualify for any other help-to-buy schemes?