Life

Help to Buy ISA: open a savings account before the deadline, advises money expert

Posted by
Hollie Richardson
Published
Woman buying a home

Money Saving Expert’s Martin Lewis has warned people who don’t own a home to open a Help to Buy ISA with just £1 before the initiative ends in November. 

Thanks to the housing crisis and no access to a Bank of Mum and Dad, the government’s Help to Buy scheme seems the likeliest way for many people to become first-time homeowners. A Help to Buy ISA basically means that the government will add 25% to your savings, up to a maximum of £3,000 on savings of £12,000, to help you buy your first home. 

But the deadline for opening a Help to Buy ISA is 30 November, which really isn’t that far away. And although the scheme isn’t without its flaws, financial expert Martin Lewis recently advised people to take advantage of it by opening an account with just £1 before deadline. 

You may also like

Breaking the brick ceiling: why the housing crisis is putting lives on hold

Writing in his popular newsletter a couple of months ago, Money Saving Expert founder Lewis advised people who are not yet on the property ladder to open a Help to Buy ISA. 

He said: “If you think you’ll need these [a Government top-up account] but aren’t sure, just open them. You need £1 in a Help To Buy ISA by November 30 or you lose the opportunity.”

He also appeared on Good Morning Britain on Friday (6 September), saying: “The easiest, simplest form of help for first-time buyers to build a deposit closes to new applicants on 30 November – now less than three months away.

“First-time buyers saving in Help to Buy ISAs get a 25% boost from the state, so each £1,000 saved becomes £1,250.

“So if you may one day want to buy a home, consider opening one now with £1 or more, as then the facility stays available until 2029.

“The Help to Buy ISA’s replacement, the Lifetime ISA (LISA) also gives a 25% boost - but other terms differ, so choosing a winner is complex…”

Help to Buy ISA: The deadline is looming.
Help to Buy ISA: The deadline is looming.

So, what do we know about the LISA that the government is favouring instead? There are pros and cons for each type, so the right one for you depends on your circumstances. 

Here are a few differences:

- You need to be over 16 to open an ISA, but LISAs can only be opened if you’re between 18 and 39 (so definitely open an ISA now if your 40th birthday is approaching).

- The Help to Buy bonus is triggered after three months of max savings, but you must have had a LISA open for a year. 

- The LISA bonus is much bigger than the ISA bonus.

- The LISA lets you buy a property worth up to £450,000 anywhere in the country, while the ISA lets you buy a home worth up to £250,000 (up to£450,000 in London).

You can find a detailed review on the differences on Money Advice Service

Want must-binge culture tips and chic interiors hacks? Sign up for the Stylist Loves Staying In email

Lewis’ advice means that at least you have the option to continue an ISA or choose the LISA, so it’s definitely worth considering.

Images: Getty

Topics

Share this article

Author

Hollie Richardson

Recommended by Hollie Richardson

Travel

Renting a flat in these European cities costs half the price of London

Let's all move to Paris

Posted by
Megan Murray
Published
Life

Finally, renting is now cheaper for everyone thanks to a new law

This is SUCH good news for renters (which is all of us, right?)

Posted by
Hollie Richardson
Published
Life

Forever young: how the housing market is delaying adulthood

Thanks to that elusive property ladder

Posted by
Harriet Hall
Published
Visible Women

Meet the woman making change happen – from the tampon tax to social housing

Stylist’s Woman of the Week is Kajal Odedra, the UK Director of Change.org

Posted by
Georgia Green
Published
People

“How renting out my spare room changed my life”

Four women reveal the transformative experiences they had through Airbnb

Posted by
Amy Swales
Published