To avoid missing out, first-time buyers are being advised to avoid using any other ISAs if they sign up for the Help-to-Buy ISA, a scheme where the government contributes £50 for every £200 you save into the account, money which goes towards purchasing a house.
The Help-to Buy ISA will begin in Autumn of this year, but there is a deadline of April 5 for opening a stocks and shares, or cash, ISA, which is required to make you eligible for the Help-to-Buy ISA. This is due to the fact that you are limited to just one ISA during a tax year.
For people who already have an existing ISA, with a direct debit, they will be required to cancel this, because it will be counted as opening another one during the tax year, which is not permitted.
The Help-to-Buy ISA allows savers to receive as much as £3,000 from the government, if they save up £12,000. However, there is a limit of £200 saved each month, so it will take several years to reach this point. They are designed to help people afford the deposit on a house, as they can usually afford the mortgage, but not the deposit.
Those who miss the deadline, and end up opening a normal ISA, will have to wait until next April before they can sign up to a Help-to-Buy ISA. There is no limit on how many can be used when purchasing a house so if a couple buy a house, they could have a total of £6,000 provided by the government to put towards the cost.
