I am looking for a suitable cash individual savings account (Isa) but I am finding interest rates very poor, except for a couple of Help to Buy Isas, where interest rates are 4%. I am married and live in our home, which my husband bought in his name only.
Does this mean I can invest in a Help to Buy Isa as a person who has never bought a house or had a mortgage before?
The good news is that if you have never owned your property, you can in good conscience open a Help to Buy Isa and enjoy a current interest rate of up to 4%, despite the fact that you are married.
Of course, the government bonus of 25% would only apply if you actually do purchase a property to live in. You’re not allowed to rent the property out so it would be a residential mortgage you’d need, not a buy to let.
But be aware that the deposit limit on a Help to Buy Isa is lower than your cash Isa allowance – you can invest up to £1,200 in the first month then a maximum of £200 a month thereafter. You also cannot open a cash Isa in the same tax year as you open a Help to Buy Isa, so you won’t be able to fully use your £15,240 cash Isa allowance.
One way around this is to choose a provider that offers a ‘portfolio Isa’ facility. This allows you to open a Help to Buy Isa and another cash Isa with the same provider without flouting the rules.
Nationwide, NatWest and Aldermore have the best paying Help to Buy Isas with the portfolio Isa facility. All of these pay 2% interest. You could also use a stocks and shares Isa to use up the remainder of the allowance if this is appropriate.