Help to Buy ISA and The Help to Buy Scheme

So, we had a question put to us this week which made us think. It was “Do I have to buy a Help to Buy house if I have a Help to Buy ISA I want to use?”

The simple answer to this is no you don’t but it made us think whether there are other buyers out there that are looking at properties under the Help To Buy Scheme because they think they have to because of their ISA.

The fact is these are two very different things and below we will explain each one.

Help to Buy ISA

The Help to Buy ISA was introduced in December 2015 and is a savings account which you can put up to £200 per month in towards your first home. When you are ready to buy a house, the government will give you a bonus of 25% of the balance. For example, if you have £4000 in the ISA when you buy a house the government will give you £1000. These ISA’s are no longer available and were replaced by Lifetime ISA’s in November 2019. However, if you opened one up before this date you have until 2030 to use it and claim the bonus.

Help to Buy Scheme

There are several different schemes under the Help to Buy Umbrella, but the main scheme people refer to when they say Help to Buy is the Help to Buy Equity Scheme. This scheme involves borrowing up to 20% of the house value from the Government to use as your deposit and you must have at least 5% of your own deposit from your own savings. This scheme is a great way to help boost your deposit and lower the amount of mortgage you will require. However, it is only available on certain new build properties up to a certain value. This scheme has also recently changed (see our other guides and Blogs) and is now only available to first time buyers.

So, as you can see above these are different things entirely. The ISA is a savings account which provides a bonus, and the Help to Buy Equity Scheme lets you borrow to boost your deposit. The big thing to note however is that you DO NOT need to use your Help to Buy ISA towards a Help to Buy house. In fact, you can use your ISA and claim the bonus towards any property you wish to buy. There is nothing you need to look out for on the property search sites, you do not have to check if you can use it on certain properties; it is available on all properties as long as it is your first home.

If you do want to buy a home using the Help to Buy Equity loan you can use the ISA and claim the bonus on these houses as well, but you don’t have to.

If you need any more help with these schemes get in touch with your local mortgage adviser.