Help to buy a house with an ISAs.

Help to Buy ISAs and First-Time Buyer Savings

Help to Buy ISAs were introduced to help first-time buyers save for a deposit on their first home. The scheme offered a government bonus of 25% on eligible savings, subject to minimum and maximum limits.

However, Help to Buy ISAs are now closed to new applicants. New savers can no longer open them. This means first-time buyers who do not already have a Help to Buy ISA will need to consider other savings options, such as a Lifetime ISA or ordinary cash savings.

Can You Still Use a Help to Buy ISA?

If you opened a Help to Buy ISA before the scheme closed to new accounts, you may still be able to use it. Existing account holders can continue saving into their Help to Buy ISA until November 2029.

The government bonus can be claimed until November 2030. After that deadline, the bonus will no longer be available.

How the Help to Buy ISA Bonus Works

The government bonus is 25% of eligible savings. The minimum bonus is £400, which requires at least £1,600 in savings. The maximum bonus is £3,000 and is available when the saver has built up £12,000 in eligible savings.

The bonus is not paid directly to the saver for general use. It is claimed through the conveyancing process when the property is being bought and is paid towards the purchase of the first home.

Example

If a first-time buyer has £4,000 saved in a Help to Buy ISA, the government bonus would be £1,000, giving a total contribution of £5,000 towards the purchase.

Who Can Use the Bonus?

To use the Help to Buy ISA bonus, the buyer must be a first-time buyer and buy a qualifying property. The property must be the buyer's only home and intended as their main residence.

The purchase price limit is up to £250,000 outside London and up to £450,000 in London. The bonus cannot be used for a buy-to-let property or for a property outside the UK.

Couples Buying Together

Help to Buy ISAs are individual accounts rather than property-based accounts. This means that when two first-time buyers buy together, and each has a Help to Buy ISA, they may each be able to claim their own bonus.

However, each buyer must meet the first-time buyer rules individually. If one buyer has owned property before, they will not usually be eligible for the bonus, even if the other buyer is eligible.

Role of the Solicitor or Conveyancer

The Help to Buy ISA bonus is usually claimed by the buyer's solicitor or conveyancer during the purchase. Buyers should tell their conveyancer early if they have a Help to Buy ISA so the correct steps can be taken before completion.

Timing matters. The account normally needs to be closed as part of the process, and the closing statement is used to claim the bonus. Buyers should not close the account without checking the correct process with their conveyancer.

Lifetime ISAs as an Alternative

For first-time buyers who cannot open a Help to Buy ISA, a Lifetime ISA may be an alternative. A Lifetime ISA can be opened by eligible people aged 18 to 39, and savers can contribute up to £4,000 per tax year. The government adds a 25% bonus.

A Lifetime ISA can be used towards a first home in the UK worth up to £450,000, provided the rules are met. It can also be used later in life, from age 60. Withdrawals for other reasons may trigger a 25% withdrawal charge, unless another permitted exception applies.

Help to Buy ISA or Lifetime ISA?

Some existing savers may have both a Help to Buy ISA and a Lifetime ISA, but the rules on using bonuses for a first home should be checked carefully. A buyer cannot usually use both government bonuses towards the same property purchase.

The Lifetime ISA may offer a higher annual saving limit, but it also has strict rules and withdrawal penalties. It may not be suitable for someone who needs access to the money for other purposes or who buys a property above the price cap.

Other Deposit Savings Options

First-time buyers may also consider ordinary cash ISAs, fixed-rate savings accounts, regular saver accounts, premium bonds or other savings products. The right option will depend on timescale, interest rate, tax position, access needs and risk tolerance.

Money needed for a house deposit in the short term is often kept in lower-risk, accessible savings. Investments may rise or fall in value and may not be suitable for buyers who expect to need the money soon.

Legal Issues When Buying a First Home

Saving the deposit is only one part of buying a first home. Buyers should also consider mortgage affordability, survey costs, legal fees, searches, Stamp Duty Land Tax, leasehold charges, service charges, ground rent, building safety issues and moving costs.

When Legal Advice May Be Needed

Legal advice may be needed where a buyer is using a Help to Buy ISA bonus, Lifetime ISA funds, gifted deposits, family loans, shared ownership, a declaration of trust, leasehold property or a purchase involving unusual conditions.

A conveyancing solicitor can advise on the purchase process, title issues, mortgage requirements, deposit arrangements, ISA bonus claims and the legal documents needed before exchange and completion.

Current Position

Help to Buy ISAs are closed to new accounts, but existing account holders can continue saving until November 2029 and claim the government bonus until November 2030. The maximum Help to Buy ISA bonus remains £3,000.

First-time buyers who do not already have a Help to Buy ISA should consider current alternatives, including Lifetime ISAs and other savings products, and should check the rules carefully before committing their deposit savings.

Disclaimer

Solicitors.com is not a firm of solicitors and does not provide legal advice or financial advice. The information on this page is for general guidance only. It should not be relied upon as a substitute for advice from a regulated solicitor, conveyancer, mortgage adviser or financial adviser. ISA rules, tax rules and property purchase requirements can change, and how the law applies will depend on the facts of each case.

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