The clock is ticking on Help-to-Buy ISA

The clock is ticking on Help-to-Buy ISA

From 30 November 2019 savers will no longer be able to make new applications for the Help-to-Buy ISA.

The short-lived ISA has helped many people on to the property ladder but after this date, no new applications can be made. Existing account holders will have until December 2030 to claim the 25 per cent bonus on their savings – up to a maximum of £3,000.

Although this ISA product is disappearing from the market, its replacement is already here in the form of the Lifetime ISA (LISA).

The LISA offers a similar government bonus of 25 per cent to a persons savings when it is used to buy a first home, but as you can deposit a greater amount over a longer timeframe, there is the potential to build up a far larger deposit.

However, unlike the Help-to-Buy ISA, the bonus is not paid on completion of the property sale, but rather at the end of the tax year in which the money is withdrawn for sale, which may mean that the bonus can contribute directly to the deposit amount.

Unfortunately, the LISA is currently only offered by 13 providers – far fewer than the Help-to-Buy ISA – and therefore take-up has been far slower.

Experts suspect that this may be because of the limitations of the LISA, which only allows savers to benefit from the bonus if it is used when they purchase their first home, withdraw the funds when they are aged 60 or older, or are diagnosed as terminally ill with only 12 months to live.

Steve Horton, Partner at Milsted Langdon Financial Services, said: “Anyone who is planning to buy their first home in the foreseeable future should act quickly. Although new Help to Buy applications will close in just a few months’ time, the Government will honour its commitment to top up savings by a further quarter, until 2030.”

For help and advice on Help to Buy ISAs and investments, please contact us.