Help to Buy Isa Q&A: Are they real help for first-time buyers or simply a vote-winner for the 2020 election?
The Chancellor announced a 25% top-up for deposits in the Budget. But before you go screaming 'free cash!', there's a few things you might want to consider
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Your support makes all the difference.I hear that the Government is giving me cash towards my first home?
That’s how George Osborne spun it, the truth is slightly less simple.
Will I get free cash?
If you fulfil certain conditions you can get up to £3,000 towards a deposit on a home if you’re a first time buyer.
That’s free cash! Where do I sign?
You’ll have to start a Help to Buy Isa and save regularly and the Government will give you 25 per cent on top of the amount you save when you buy a property up to a hand-out limit of £3,000, which you’ll only get if you’ve saved £12,000.
What if I have £12,000 already? Can’t I have the free cash now?
No. The new Help to Buy Isas won’t be introduced until the Autumn and then, while you’ll be able to deposit £1,000, the maximum you’ll be able to contribute each month will be £200.
So, hang on, I can’t have the free cash now?
No. The earliest you’ll be able to qualify for £3,000 from the Government will be sometime in 2020.
That can’t be right. Didn’t Osborne promise that he’s helping people now?
Look, if you start a Help to Buy Isa with £1,000 in say, September, and stash away £200 a month, it will take you four years and seven months to build up £12,000, which would qualify for a £3,000 bonus when you buy a house. That would take you to April 2020.
But won’t house prices continue to rise? That would mean the average deposit would cost more and £15,000 wouldn’t be enough, doesn’t it?
That’s highly likely. But there’s nothing to stop you saving more in a separate account or, if you’re part of a couple, bear in mind you can both open one of the new Isas. That would give the pair of you a £6,000 bonus in April 2020, or £30,000 deposit to put towards your home.
Isn’t April 2020 a month before the next election after this year’s?
That’s right. It means any first-time buyers who’ve diligently saved for four and a half-years will finally qualify for free cash from the Government a month before the general election.
Does that mean the whole thing is a relatively cheap way to buy votes in 2020?
I doubt whether the Tories are that cynical about electioneering that far ahead of time. Let’s just call it a happy coincidence.
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