What is a Help to Buy ISA, and can I still use mine?
The Help to Buy ISA was a government savings scheme designed to help first time buyers save for a deposit. It closed to new applicants in November 2019, but if you already have one, it remains valid and the government bonus is still available to claim when you buy your first home.
If you are wondering whether your Help to Buy ISA is still worth keeping, how to use it, or how it compares to the Lifetime ISA, this article answers all of those questions.
What was the Help to Buy ISA?
The Help to Buy ISA was a tax-free savings account for first time buyers. You could save up to £200 per month into the account (with a one-off initial deposit of up to £1,200 when you first opened it). For every £200 you saved, the government would add a £50 bonus, equivalent to a 25% top-up on your contributions.
The maximum government bonus available was £3,000, which required a total personal saving of £12,000.
The scheme closed to new applicants on 30 November 2019. Existing account holders can continue saving into their accounts until November 2029, and can claim the bonus until November 2030.
Can I still use my Help to Buy ISA?
Yes. If you have a Help to Buy ISA that you opened before November 2019, it is still a valid savings vehicle and the bonus is still claimable when you buy your first home.
You can continue to pay in up to £200 per month and the government bonus will be added at the point of completion on your purchase. The account earns interest in the meantime, though rates vary by provider.
If your account has been sitting unused, it is worth checking the balance and the current interest rate. If the rate is low, you may want to consider whether a different savings account offers better returns for the same money, but do not close the ISA without understanding the implications for the bonus.
How do you claim the bonus?
The process for claiming the Help to Buy ISA bonus is slightly more complicated than many buyers realise, and there is an important timing consideration to be aware of.
Your solicitor claims the bonus on your behalf at completion. You close the ISA, receive the funds, and your solicitor submits the claim to the government scheme administrator. The bonus is paid directly to your solicitor and applied toward the purchase cost.
The key point is that the bonus is paid at completion, not at exchange. This means you cannot use the bonus as part of your exchange deposit. If your mortgage lender requires a 10% deposit at exchange, you need to have that money available without counting on the bonus.
This catches some buyers out. If you are cutting it close on deposit funds, make sure you understand that the ISA money (including the bonus) will be available at completion but not at exchange.
What property can I use it on?
There are two conditions on the property itself.
- The purchase price must be no more than £250,000, or £450,000 in London. If you are buying above these thresholds, you cannot use the Help to Buy ISA bonus.
- You must be a first time buyer. The scheme is not available to anyone who has previously owned a residential property.
Help to Buy ISA vs Lifetime ISA
If you have a Help to Buy ISA but have not yet bought a property, you may be wondering whether you should open a Lifetime ISA instead, or whether you can have both.
The short answer is that you can have both, but you can only use the bonus from one of them toward a first home purchase.
Here is how the two compare:
The Help to Buy ISA bonus is claimed at completion through your solicitor. It can be used on properties up to £250,000 (or £450,000 in London) and the maximum bonus is £3,000.
The Lifetime ISA allows you to save up to £4,000 per year and the government adds a 25% bonus annually, up to £1,000 per year. The funds and bonus can be used on a first home purchase on a property up to £450,000, and unlike the Help to Buy ISA, the Lifetime ISA funds are available at exchange rather than only at completion.
The Lifetime ISA has a higher potential bonus (up to £32,000 over the maximum saving period versus £3,000 for the Help to Buy ISA), a higher property price limit, and the practical advantage of funds being available earlier in the process.
If you are a first time buyer aged between 18 and 39 who does not yet have a Lifetime ISA, it is almost certainly worth opening one, even if you also continue saving into a Help to Buy ISA. You can save into both, you just have to choose which bonus to claim when you buy.
Should you keep your Help to Buy ISA?
If you have a meaningful balance, keep it. The 25% government bonus on up to £12,000 of savings is a genuine benefit, even if the maximum available (£3,000) is modest compared to the Lifetime ISA.
If you are buying under £250,000 (or £450,000 in London) and don't yet have a Lifetime ISA, you may prefer to use the Help to Buy ISA bonus and open a Lifetime ISA for future saving.
If your property target is above the Help to Buy ISA threshold, open a Lifetime ISA, as it has the higher £450,000 property price limit.
The short version
The Help to Buy ISA closed to new applicants in 2019, but existing accounts remain valid. You can continue saving up to £200 per month and claim the 25% government bonus (up to £3,000) at the point of completion on your first home purchase.
The key limitation is the property price cap (£250,000 outside London, £450,000 in London) and the fact that the bonus is only available at completion, not exchange.
If you have a Help to Buy ISA, keep it. If you do not have a Lifetime ISA as well, consider opening one: you can use the bonus from one account toward your purchase, and both schemes can run simultaneously.
If you want to understand how your existing ISA savings feed into your deposit strategy, a mortgage adviser can help you plan it clearly.
This article is for informational purposes only and does not constitute financial advice. Government scheme terms can change, so always verify current rules before making decisions. Speak to a qualified mortgage adviser before making decisions about borrowing.