Prospective first-time buyers have just a year left to open an aid to Buy Isa and obtain a 25% boost on their own savings.
Applications for the popular savings accounts, that have so far helped nearly 150,000 homebuyers, are going to close on 30 November 2022.
Here, we explain the benefits of Assistance to Buy Isas, and you'll discover the best rates and the alternatives available to first-time buyers
What is a Assistance to Buy Isa?
Help to purchase Isas are government-backed savings accounts especially for first-time buyers.
The accounts are offered by many UK banks, and involve the federal government topping up savings by 25% when you come to buy your first home. They work such as this:
The property you buy must be worth under lb250,000 through the UK, or lb450,000 working in london.
The government bonus will be paid to your conveyancer on completion of the home purchase, meaning it can’t be utilized towards your exchange deposit.
Although the scheme is placed to close in November 2022, this can don't have any impact on those who already have a merchant account.
Help to Buy Isa rates: how to find the best deal
The table below shows the accounts providing the highest Assistance to Buy Isa rates. All are available nationwide.
By clicking the links below, you'll be taken through to Which? Money Compare, where you can find out much more about each product.
Account | AER | Terms |
Barclays Help to Buy Isa | 2.58% | lb1 minimum initial deposit |
Newcastle Building Society Help to Buy Isa | 2.56% | lb1 minimum initial deposit |
Nationwide Assistance to Buy Isa | 2.5% | lb1 minimum initial deposit |
Virgin Money Help to Buy Isa | 2.5% | lb1 minimum initial deposit |
NatWest Assistance to Buy Isa | 2.5% | lb1 minimum initial deposit |
Source: Which? Money Compare. Correct 26 November 2022.
Depending on where you live, you might be in a position to bag a much better rate from the local building society, some of which offer deals that beat the very best nationally available rates. The very best rates now available are as follows:
Nearly 150,000 buyers use Assistance to Buy Isas
Between the launch of the Help to Buy Isa in December 2022 and also the end of March this season, 146,753 homes had been bought utilizing a government bonus, based on figures in the Treasury.
In total, 196,007 bonuses totaling lb157m had been paid through the government, using the average bonus standing around lb800.
The most widely used regions to redeem a Help to Buy Isa bonus so far have been its northern border West, Yorkshire and the Humber and also the West Midlands.
What other saving choices are out there for first-time buyers?
Lifetime Isa
The government launched the lifetime Isa in April 2022 as an alternative savings product for first-time buyers and people seeking to save for retirement. The guidelines are listed below:
If you withdraw money for any reason apart from buying the first home (or for retirement when you’re over 60), you'll incur a hefty withdrawal penalty.
First-time buyer savings account
Some banks and building societies offer their very own first-time buyer savings accounts. While interest rates on these products could be higher, they don’t take advantage of the 25% government bonus.
The top rates are currently provided by Monmouthshire Building Society’s First Home Bonus Saver, which pays 5% AER and requires a minimum initial deposit of lb20. The AER drops to 1% after 60 months, and it’s only available to customers in a few postcodes.
Elsewhere, Hanley Economic Building Society has a Home Deposit Saver account that pays 3.1% AER, with a minimum initial deposit of lb100.
For this account, you have to pay among lb100-lb500 each month, and while it’s billed as an instant-access account, you’ll get in a loss of 180 days’ interest if you withdraw money for any reason other than spending money on a property deposit.