The chancellor announces a new Isa to help first-time buyers.
First-time buyers are being offered up to £3,000 each to put down as a home deposit through a new help-to-buy Isa unveiled in the chancellor’s budget.
How will it work?
First-time buyers who save in a help-to-buy Isa will have their savings boosted with a payment from the government when they decide to buy a property. The bonus will be equal to 25% of their savings, so for every £200 they save, the government will give them £50.
The maximum amount that can be put into the Isa and boosted is £12,000 – the government’s payment will top this up to £15,000.
The bonus is being offered for each person, not each house, so a couple will be able to get up to £6,000 towards their purchase.
As well as the government bonus, the Isas will also pay interest in the normal way.
Will I qualify?
Anyone aged 16 and over who has never owned a home will be able to open an account. The payment will be made towards a first home only to live in.
The cost of the homes that the account can be used to buy is capped at £250,000 outside of London.
How much can I save?
There is a minimum government contribution of £400, so you will have to build up at least £1,600 in your account yourself. When you first open an account you will be able to put in a lump sum of up to £1,000, then you can pay in up to £200 a month.
To get the maximum bonus from the government you will need to save for five years if you can put in £200 a month; if you can afford to start with a £1,000 lump sum you will qualify for the full amount in just over four-and-a-half years.
When do I have to buy my home?
The scheme will be open to new accountholders for four years from the autumn, the chancellor said, but once you have opened an account you can keep it until you are ready to buy.
While your account is open you can withdraw money but you will only get the bonus when you come to buy a home.
Will this help me buy a home?
If you are able to save then having a larger deposit could mean you qualify for a lower interest rate on their mortgage.
However, you will still have to show mortgage lenders that you can afford the monthly repayments on a loan
Where will I get the Isa?
The Treasury says they will be run by banks and building societies and will be available in the Autumn and that savers will be able to move between Isas to make sure they are getting the best deal.