The Government is set to launch a Help to Buy Isa to help first-time buyers save for a deposit.
Giving his Budget speech today, Chancellor George Osborne announced that for every £200 saved, the Government will top it up with an additional £50 – a 25 per cent tax-free bonus. The bonus will be calculated and paid when the borrower buys their first home.
The bonus is available on homes up to £450,000 in London and £250,000 outside London.
There is a maximum initial deposit of £1,000 and the maximum monthly deposit is set at £200. The Government will contribute a maximum of £3,000 on £12,000 of savings.
The scheme is only open to first-time buyers and each buyer can only have one Help to Buy: Isa during the lifetime of the scheme.
Savers will be able to open a Help to Buy: Isa for a four-year period after the date of the scheme formally opens. Once an account is opened there is no limit on how long a person can save into a Help to Buy: Isa and no time limit on when the person can use their Government bonus.
Savers can only save into one cash Isa per year, as are the rules now. This means it will not be possible for a saver to subscribe to a Help to Buy Isa and another cash Isa with another provider.
The Isas, which will be available through banks and building societies, will be launched in the autumn.
Osborne said: “It is as simple as this: we will work hand in hand to help you buy your first home. This is a Budget that works for you.”