First Time Buyers To Get 25% Deposit Bonus With New ISA

If you’re saving up for your first house or looking to move, you might view the new figures from Nationwide Building Society with some trepidation. The lender’s data for March to April shows that the average house price in the UK has risen slightly for the first time in several months, and now stands at £193,048.

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Now in real terms, if you’re saving up for your first property, a deposit of 10% equates to around £19,300; if you want a really good deal on your mortgage rates then you will have to save even more than this, and some lenders may even demand it.

The good news is that the government has outlined plans for a new savings scheme that will potentially help first time buyers meet their savings targets more quickly – by giving them a bonus of 25% through a new ISA.

If you haven’t already investigated Individual Savings Accounts (ISAs), they are a way of saving an agreed maximum amount, tax-free. The new Help to Buy ISA will be available through banks and building societies, and first time buyers will receive a bonus representing 25% of the amount saved.

For example, the maximum monthly saving of £200 will attract an additional contribution from the government of £50, to a maximum contribution of £3,000 on £12,000 of savings.

If you’re saving up for a home with your friend, partner or spouse, the ISAs are available per person rather per home; so both of you will be eligible for the bonus.

This scheme hasn’t been officially launched yet as the government is still negotiating with banks over the small print. In addition, if you’re already paying into an ISA, Money Supermarket warns that savers won’t be able to open or contribute to both a cash ISA and a Help to Buy ISA in the same tax year.

If you’re saving for a home and an emergency threatens to derail your nest egg, you might consider a Logbook Loan to tide you over. These are ideal for short term borrowing, and you can pay them back as early as you like without incurring penalties. See more on our How Logbook Loans Work page.

Budget 2015, ISA, Money Saving

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