Help to Buy Isas: how they work

Published by Tom Wilson on 19 November 2015.
Last updated on 22 August 2016

The scheme launched on 1 December, and 15 banks are building societies currently offer them. We've reviewed the products and highlighted the best deals here

Here are the essential 'need to know' questions. If you have others, ask in the comments below. 

What is a Help to Buy Isa?

Essentially it is a Cash Isa that helps people save a deposit to buy a home. The government will contribute £1 towards your deposit for each £4 you save, up to a maximum contribution of £3,000 on savings of £12,000.

How does the bonus work?

It’s paid on regular savings up to £200 a month, which will earn a £50 top-up. You can also deposit a lump sum up to £1,000 when you open the Help to Buy Isa, which will also earn the 25% bonus. The bonus is also paid on any interest earned on your savings, up to the maximum of £3,000.

How do I get the money?

The bonus gets calculated and paid when you come to buy your property. Your solicitor will arrange the paperwork, and the money is paid to your mortgage provider directly as part of your deposit. By law, solicitors are not allowed to charge you more than £60 (£50 + VAT) for this administration. 

Can I join the scheme if I already have an Isa this year?

Yes, but as you’re only allowed one Cash Isa each year, you’ll need to transfer any savings you’ve already made to the new account if your savings are in cash.

If you've saved more than the £1,200 (£1,000 lump sum, plus first month's regular savings) that you can open account with you have a few options:

  1. Close the account completely, and then restart with a help to buy Isa. If you do this, anything you've already saved into an Isa will be lost from your savings allowance for the year.
  2. Switch to an account that lets you hold a Cash Isa alongside a Help to Buy Isa. Currently, Aldermore, Nationwide and Newcastle Building Society offer these products. This is basically a work-around for the one Cash Isa per rule year. They do this by putting your Help to Buy Isa and other savings account inside a single 'parent' Isa. 
  3. Transfer any savings from the current year into a stocks and shares Isa, and then open a Help to Buy Isa. This is only suitable if you're willing to take some investment risk, and your annual allowance will be split across the two accounts. 

Can I transfer between Help to Buy Isas?

Yes. This is similar to transfering between Cash Isas. However, as you're only allowed one help to buy Isa (rather than just one per year), you'll have to transfer all your savings over. The Treasury has confirmed this won't affect your 25% top up. However, as most accounts pay interest annually, you may forfeit up to a year's interest.

Can I put investments in a Help to Buy Isa?

No, the scheme only is available for Cash Isas.

Do I have to buy a home with the cash?

You’re free to use the Isa savings however you like, but you’ll only get the extra cash from the government when you have completed your property purchase.

Who can use it?

The scheme is only available to first time buyers. To be eligible for the government contribution, the property must cost no more than £250,000, or £450,000 if you’re buying in London. There’s no upper age limit on the scheme, but you’ll need to be 16 or older to open a Cash Isa.

Buy-to-let investments are ineligible.


How long is the scheme available for?

Under the current plans, the you can starta Help to Buy Isa until 2019 and you'll have to claim the bonus by 2030.

What other support is available for first time buyers?

Some providers offer similar savings products that pay a bonus on savings for a house deposit. For example, the Newcastle Building Society pays an extra £1,000 to first time buyers if they save using the Big Home Saver Isa, providing they take out a mortgage with the same provider. Newcastle has confirmed it is offering a 'portfolio Isa', which lets you hold multiple cash Isas within the same wrapper. That means if you're able to save more you can use the two schemes in tandem, potentially meaning first time buyers can get a £4,000 bonus, rather than the £3,000 up for grabs through the help to buy Isa.

The government also offers a Help to Buy equity scheme, where the government will pay 20% of the property price in exchange for a 20% equity stake, rising to 40% in London. This can be used in conjuction with the Help to Buy Isa.

There’s also the Help to Buy mortgage guarantee scheme, where the government guarantees repayment of your loan to the lender, making it easier for people to borrow with smaller deposits.

Where can I get more information?

For more details of government support for first time buyers, visit

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