Help to Buy ISA v Lifetime ISA

Blogs

Both the Help to Buy ISA and the Lifetime ISA are Government initiatives set up to help savers purchase their first home by providing a bonus of 25% on top of their savings (and in addition to any interest accrued). You can save into both schemes if you meet the eligibility criteria, however, you can only use the bonus from one to buy a house. The accounts are available to each first time buyer. This means that if you are planning to buy with your partner, you can both apply the bonus from your individual Help to Buy ISA or Lifetime ISA accounts towards the purchase.

 

Help to Buy ISA

As of November 2019 you can no longer set up a new Help To Buy ISA account. If you already have a Help to Buy ISA you can still continue saving into your account until November 2029 and you must claim your bonus by 1st December 2030.

Eligibility for a Help to Buy ISA

  • You need to have saved at least £1,600 in your Help to Buy ISA before you can claim the minimum government bonus of £400. (The maximum government bonus you can receive is £3,000).
  • The property you are purchasing must be in the UK.
  • The purchase price must not exceed £250,000 (or £450,000 in London).
  • It must be the only home you will own at the time of purchase.
  • The property must be where you intend on living.
  • It must be purchased with a mortgage.

Conveyancing procedure for a Help to Buy ISA

You should let your solicitor know at the start of the transaction that you have a Help to Buy ISA. You will need to sign a declaration to confirm that both you and the property meet the eligibility criteria. You will need to close the account and send the final closing statement and signed declaration to your solicitor. Your solicitor will then apply for the bonus payment which will be paid directly to your solicitor’s client account to be applied towards the money required to complete the purchase. If the purchase does not complete within 90 days of receipt of the bonus payment, the bonus must be returned. Your solicitor can then obtain a Purchase Failure Notice which will enable you to reinstate your Help to Buy ISA account.

Lifetime ISA

The Lifetime ISA was launched on 6 April 2017 to help people aged between 18 and 40 save flexibly towards a first home or retirement. (There is a 25% government charge payable if you withdraw before 60 for any reason other than buying your first home).

Eligibility for a Lifetime ISA

The account must have been open for at least 1 year and has the same eligibility criteria as a Help to Buy ISA (referred to above).

Conveyancing procedure for a Lifetime ISA

As with a Help to Buy ISA, you should inform your solicitor at the start of the transaction that you hold a Lifetime ISA. You will need to sign a declaration to confirm eligibility and your solicitor will submit the declaration and request for funds. The full funds (including the bonus) will be transferred directly to your solicitor. These funds can be applied towards the 10% deposit required to exchange contracts or the balance of the deposit required to complete. You must complete the purchase within 90 days of receipt of funds. If the purchase is not likely to complete within this timeframe, your solicitor should request an extension of time or, return the funds.