From 30 November 2019 savers will no longer be able to make new applications for the Help-to-Buy ISA.
The short-lived ISA has helped many people on to the property ladder but after this date, no new applications can be made. You can keep saving into existing accounts until 30 November 2029 but after this date accounts will be closed to additional contributions. Existing account holders will only have until December 2030 to claim the 25 per cent bonus on their savings.
Although this ISA product is disappearing from the market, its replacement is already here in the form of the Lifetime ISA (LISA). To open a LISA account you must be over the age of 18 but under 40 years of age.
You can put up to £4,000.00 into your LISA each year (until you are 50). The government will add a 25 per cent bonus to your savings, with up to a maximum of £1,000.00 a year.
The bonus is calculated in your Lifetime ISA account on the 6th day of each month, where you will have accumulated a bonus on all the money which you paid in the previous month. That bonus is then paid into the account four weeks later, meaning that it can contribute directly to a deposit amount.
Unfortunately, the LISA is currently only offered by 13 providers – far fewer than the Help-to-Buy ISA – and therefore take-up has been far slower. Experts suspect that this may be because of the limitations of the LISA, which only allows savers to benefit from the bonus if it is used when they purchase their first home, if they withdraw the funds when they are aged 60 or older or if they are terminally ill with less than 12 months to live. If you withdraw the money for any other reason you will pay a 25% charge.
You can use your LISA to help you buy your first home if all of the following apply: the property purchase is for less than £450,000.00, you buy the property at least 12 months after opening your LISA account, you have a conveyancer or solicitor acting on your behalf (as the bonus will be paid to them) and you are buying with a mortgage.
For further advice on legal issues relating to buying or selling a property, please contact our expert team today.