Virgin Money latest to pull top-paying Help to Buy Isa
Virgin Money is the latest provider to slash the rate on its Help to Buy Isa, putting more pressure on first-time buyers looking to save a deposit while house prices continue to rapidly outpace earnings.
Until yesterday, Virgin Money offered 3% interest to people signing up for its Help to Buy Isa, but new customers will now only receive 2.5%. Existing customers will still get 3%.
A spokesperson for Virgin Money says its rates remain competitive.
Best Help to Buy Isa buys
Despite Virgin’s rate cut, it is still the joint-best Help to Buy Isa for most people in the UK. Halifax also pays 2.5% to new customers, as does Santander, but only for people with its 123 Current Account.
There is a 4% Help to Buy Isa from Cumberland Building Society, but it’s only available to people in parts of North West England and Southern Scotland.
Residents of Northern Ireland can also sign up for the Progressive Building Society’s Help to Buy Isa, which pays 2.75%.
Invidivual Savings Accounts were introduced on 6 April 1999 to replace personal equity plans (PEPs) and tax-exempt special savings accounts (TESSAs) with one plan that covered both stockmarket and savings products, the returns from which are tax-exempt. The ISA is not in itself an investment product. Rather, it’s a tax-free “wrapper” in which you place investments and savings up to a specified annual allowance where the returns (capital growth, dividends, interest) are tax-exempt (you don’t have to declare ISAs and their contents on your tax return). However, any dividends are taxed within the investment, and that can’t be reclaimed.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.