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How you can earn £3,000 with a new ISA.
Tuesday 19 March 2015 saw George Osbourne open his little red budget briefcase for the last time before the general election and whether you agree with his politics or not there was certainly some positive news for first time buyers. At CIA Insurance we have decided to take a look in greater detail about the new ISAs and whether they are really worth it.
The past few years have highlighted how difficult it is getting onto the first rung of the property ladder with the average age of the first time buyer now rising to 36 years old. With the market continuing to rise and the amount of money needed for a deposit spiralling out of control the Government have released new plans for helping first time buyers to save the money they need.
Help To Buy ISA
In recent years the Government have been trying to help first time buyers with their Help To Buy Scheme, but this has only applied to new builds – they have now gone a step further though by introducing a new Help To Buy ISA. This new ISA is expected to help thousands of people save the money required for a deposit and can be used on any home worth up to £250,000 outside of London, or £450,000 in the capital itself. So what is it all about?
The new ISA is being prepared for launch in the autumn and will be available to those who are looking to buy a property for the first time. It will work in a similar way to existing cash ISAs except you will receive a rather healthy bonus from the Government which will see your monthly contribution topped up by 25%, up to a maximum of £50 per month. This means that if you put £200 in this ISA every month the Government will add a further £50 and to start you off you can put an initial £1,000 in the ISA and receive a £250 bonus.
What Are The Conditions?
If it all sounds good so far then that’s probably because it is, although there are a few conditions linked to the ISA. Firstly the maximum amount the Government will contribute is capped at £3,000 and it will take a few years to get to this amount but if you make it this far then you will have saved £12,000 yourself which would make for a great deposit.
You also can’t withdraw the money from the ISA until you have received £400 in bonuses which means that you will have to keep your money in there for at least 8 months.
It is also worth noting that you can’t contribute to a cash ISA and a help to buy one in the same financial year, so if you are wanting to open a help to buy ISA as soon as possible you will have to stop paying into any existing ISA this year from April 6th.
strong>So Is It Worth It?
The new ISAs are definitely worth looking at if you are struggling to raise money to pay for a deposit although they can only be used for residential mortgages, not buy-to-let properties. It is always worth exploring your options with a financial advisor or using available resources like the money saving expert who offer a thorough Q&A.