New figures have shown that thousands of first time buyers have opened Help to Buy ISAs over the past six months, as they try and build a large enough deposit to get onto the housing ladder.
The Help to Buy ISA was launched last December and allows potential first time buyers to receive a bonus of 25% if they money saved is used to buy a home; for example, if £200 is saved, a £50 bonus will be payable.
The bonus is capped at £3,000, however for couples this is effectively doubled as the accounts are opened on an individual basis. The minimum bonus is £400, which means savers must have built up at least £1,600 to qualify.
Furthermore, the interest received by savers is tax-free.
First time buyers can pay up to £200 per month into their Help to Buy ISA and in the first month can make a lump sum contribution of up to £1,200.
The figures show:
- Since December 2015 550,000 people have opened Help to Buy ISAs
- Some first time buyers have already used their cash to buy a home, with bonuses paid out to 2,090 people
- The average bonus paid was £421
Help to Buy ISAs are offered by a wide range of banks and building societies and despite criticism when they were launched, have clearly provide popular with first time buyers.
Learn more about Help to Buy ISAs and the interest rates payable by clicking here.