Check out our full comparison of Apple Pay vs PayPal in the UK, including pros, cons and features compared.
If you’re saving towards buying a home in the UK, a Help to Buy ISA could be a very useful product for you.
But what actually is a Help to Buy ISA, and who’s eligible to open one? We’ll cover everything you need to know here in this guide, including the rules, how to open one and those all-important interest rates.
Maybe you want to earn a return in multiple currencies? With Wise Interest, you can get a 4.82% variable rate on your GBP balance held in your Wise multi-currency account.
Capital at risk. Current rates do not guarantee future growth.
Variable rate is based on 7 day performance as of 10 Aug 2023. This fund has returned an 0.93% annual average over the last 5 years, excluding Wise and fund manager fees. See full 5 year past performance of funds.
A Help to Buy ISA is a government-run scheme aimed at people wanting to buy a home in the UK. Crucially, it’s only for first-time buyers, to help them save towards a mortgage deposit.
Like other types of ISA products, the Help to Buy ISA offers tax-free savings up to your personal allowance. Accounts offer interest rates, as well as tax-free bonus on your savings provided by the government.
Unfortunately, you can no longer open a new Help to Buy ISA in the UK. But if you already have one, you can continue to save into it and receive the government bonus.¹
A Help to Buy ISA works just like an ordinary savings account, but with one key difference. You’ll open an account and deposit funds, but the government will top up your contributions with an extra bonus - up to a limit. This helps your savings grow faster. On top of this, Help to Buy ISAs also offer interest on your balance.
There are a few strings attached though. You’ll only be able to pay in up to £200 a month, and you’ll need to save at least £1,600 in order to receive the government bonus. The maximum you can save in a Help to Buy ISA is £12,000.¹
You’ll only get the government bonus when you buy your property, and need to hand over the deposit. Once your offer on a property has been accepted, you’ll need to ask your conveyancer to apply for the bonus.
The government bonus for Help to Buy ISAs is 25%.¹ Here’s a look at how much this works out as, depending on how much you save:¹
|£200 (the monthly max. you can save)||£50|
|£1,600 (the min. savings to get the bonus)||£400|
|£12,000 (max. you can save in a Help to Buy ISA)||£3,000|
The Help to Buy ISA rules are a little strict, but it could be worth it to help you save for a deposit - which can be difficult while renting a home at the same time.
To be eligible, you’ll need to be:¹
- Living in the UK and buying a home there
- At least 16 years old
- A first-time buyer, who doesn’t already own a property
- Buying your property with a mortgage
- Buying a home worth up to £250,000 (or up to £450,000 if in London)
- Planning to live in the property, not rent it out.
As you can no longer apply for a Help to Buy ISA, not many providers have products available.
Here are just a handful of UK banks that are still advertising their Help to Buy interest rates, which are expressed as AER variable. This stands for Annual Equivalent Rate, and shows you how much you’ll earn over the course of a whole year. Variable means that the rate can change at any time.
|Bank name and ISA||AER on £1-£12,000||AER on £12,000+|
|HSBC Help to Buy ISA²||2.75%||1.30%|
|Halifax Help to Buy ISA³||2%||0.70%|
|Lloyds Help to Buy ISA⁴||2.45%||0.85%|
|Barclays Help to Buy ISA⁵||2.02%||2.02%|
With Help to Buy ISAs, withdrawals are possible, and even unlimited with some providers.⁴ But bear in mind that you won’t get the government bonus on anything you take out.
When you want to buy your home and use your savings (and bonus) for your deposit, you’ll need to close your account. Then, you can claim your bonus through your conveyancer.
If you close your ISA and transfer it to another non-ISA savings account, you’ll lose the tax-free status on your savings.
Now, let’s run through a final few questions you might have about the Help to Buy ISA.
No, new applications for Help to Buy ISAs closed on 30th November 2019. If you already have an account, you can keep saving in it until November 2029.¹
Even though the Help to Buy Scheme is no longer available to new customers, you can still switch between providers if you already have an ISA open.
Yes, you can use any government bonus you’ve earned towards the deposit for your new property.
Only if you’re buying a property in London, where the maximum value limit is raised to £450,000 (as property prices are much higher in the capital).¹
You should be able to transfer a Help to Buy ISA to a LISA. You won’t get the Help to Buy bonus, but any money you transfer will qualify for the LISA bonus (which is also 25%).¹
And that’s it - all the essentials you need to know about the Help to Buy ISA scheme.
- Money Helper - A guide to Help to Buy ISAs
- HSBC - Help to Buy ISA
- Halifax - Help to Buy ISA
- Lloyds - Help to Buy ISA
- Barclays - Help to Buy ISA
Sources last checked on date: 30-May-2023
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
Check out our essential guide to PayPal vs. credit cards for shopping online in the UK, including pros, cons, security, fees, limits and more.
Each Christmas, scammers target people with holiday booking scams. Read Alex's story to learn how scammers stole their money and tried to ruin their holidays.
If you’re looking for a good place to keep your money, or for a day to day current account, you may be wondering: is the Co-operative Bank safe - or even: is...
Each Christmas, scammers target people with holiday booking scams. Read Max's story to learn how scammers stole their money and tried to ruin their holiday.
Can I use Revolut in Albania? A handy guide covering using your Revolut card and account in Albania, spending in ALL and more.