On 30 November 2019, the government’s Help to Buy ISA scheme was closed to new applications.
If you opened a Help to Buy ISA before this end date, you can still continue to use it. If you haven’t, there are other ways you can grow your deposit for a home.
Use this guide to find out more about the changes to the Help to Buy ISA and also what other options you may be able to use to save for your first home.
What is a Help to Buy ISA?
A Help to Buy ISA is a type of ISA used to help first-time buyers save their deposit for a home. The government-backed saving initiative was first brought in on 1 December 2015 and has been used by a number of first-time buyers all across the UK. The government then closed the scheme to new applicants on 30 November 2019.
When saving into this type of ISA, you’re able to claim a 25% bonus from the UK government on your savings. The bonus is capped at £3,000 and you’re able to save up to £200 a month.
If you opened a Help to Buy ISA before 30 November 2019, you can still continue to use the account to save for a deposit. You’re able to save into it until 30 November 2029 and claim the government bonus until 1 December 2030.
What are the alternatives to a Help to Buy ISA?
If you weren’t able to open a Help to Buy ISA before the deadline, there are other savings options available, including different types of ISAs and savings accounts. Finding the right one for your needs as a first-time buyer is key.
ISAs are a tax-efficient way to save, so you may still be able to open one and use it as a way to save for your home deposit. There are different ISAs which may be useful, including:
It’s worth noting, HSBC do not currently offer lifetime ISAs.
What happens if you already have a Help to Buy ISA?
If you opened a Help to Buy ISA before the deadline, you’ll still be able to use this as a way to save money.
Can you transfer your Help to Buy ISA after 30 November?
After 30 November 2019, you should still be able to transfer your Help to Buy ISA to a bank, building society or credit union if you opened it before the deadline.
You’ll need to check the provider offers a Help to Buy ISA first and you’ll need to ensure they accept transfers.
Do not withdraw the money yourself – speak to you bank or financial provider first to understand the steps you need to take in order to transfer your ISA.
Find out more about transferring into an HSBC Help to Buy ISA.
Can you take your money out of the Help to Buy ISA if you’re not buying a home?
You can take your money out of your Help to Buy ISA if you’re not looking to buy a property anymore. However, you will not be entitled to the bonus the government pays.
How do you close a Help to Buy ISA and receive your bonus from the government?
When you find a property you’d like to purchase, you’ll need to contact your bank so they can close your account. Do not withdraw the money yourself. If you do take the money out, you may not be eligible to receive the government bonus.
When you’ve closed your account, you’ll have 12 months to claim your government bonus. The bonus can’t be used to pay for your solicitor/conveyancer fees, or any other indirect costs which may be associated with buying your first home.
When you close your Help to Buy ISA with HSBC, we’ll send you a statement and a closing letter within 5 days. To receive the government bonus, you’ll need to share these letters with your solicitor/conveyancer along with your first-time buyer declaration. They’ll then be able to claim the bonus for you.
The government bonus is only paid for the mortgage deposit and you’ll need to have saved £1,600 into your Help to Buy ISA as the minimum government bonus is £400.
Can you reopen your account if the property sale doesn’t go through?
If your property purchase doesn’t go through, you should be able to reopen your Help to Buy ISA account and continue to save in it.
To reopen a HSBC Help to Buy ISA, you’ll need to provide us with a Purchase Failure Notice (PFN) and reopen the account within 12 months of its closure. The date of closure can be found on your closing statement. You’ll then be able to continue saving into your Help to Buy ISA until 30 November 2029 and claim the government bonus until 1 December 2030.
Whether you’re continuing to save into a Help to Buy ISA or you’re considering an alternative option, looking at ways you can build your savings can be useful.