Pete Mugleston | Mortgage AdvisorPete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 3rd December 2019 *
The Help to Buy: ISA scheme closed to new applicants after 30th November 2019. However, if you're a first-time buyer, this doesn't mean that you can't save for a deposit without a 25% top-up from the government.
In this article, we take a look at the Help to Buy: ISA scheme now that the deadline has passed, what it means if you already have this ISA, and what your options are if you're looking to save up for your first home.
Read on or use the links below to jump to the section that’s relevant to you:
When is the deadline for Help to Buy: ISA applications?
The last date you could open this ISA was Saturday the 30th November 2019, though some banks and building societies closed their Help to Buy: ISA applications early.
Santander, for example, closed their applications early on Thursday 28th November – two days before the official deadline.
Other banks like Natwest and Nationwide were open until 30th November, and also offered the same interest rate of 2.5% AER variable. They also allowed you to open a Cash ISA in the same tax year, so if you opened a Help to Buy: ISA before the deadline, you can also open this one before 5th April 2020.
Make sure to look into these schemes sooner rather than later so that you don’t miss out. Make an enquiry if you need any advice on how to save for your mortgage. The expert brokers we work with can also help you find the best deal on the mortgage you’ll be applying for afterwards.
How do I apply for a Help to Buy: ISA before they close?
Unfortunately, you can no longer apply for a Help to Buy: ISA. You could open one if you were 16 or older, and had never owned a property before.
Like with any other ISA, there were no credit score checks or affordability criteria to meet. So, if you took out a Help to Buy: ISA and were wondering if it had affected your credit rating, the good news is that it wouldn't have.
Missed out on a Help to Buy: ISA? The good news is that you still have options.
The advisors we work with can advise you on alternative schemes for first-time buyers or assist you with your Help to Buy: ISA questions. They can also make sure you’re introduced to the right lender when it comes to applying for your mortgage.
What happens after the deadline?
After the deadline, those with a Help to Buy: ISA account will still be able to contribute into it until November 2029, and you can claim your bonus until December 2030.
In that time, you can withdraw your money any time you like, though if you plan on withdrawing the whole amount from your ISA account, you will need to get in touch with the provider.
If you’re ready to apply for your mortgage and claim your bonus, make an enquiry and we’ll introduce you to an expert broker who can help you find the best deals.
Is the deadline the same in Scotland?
Unfortunately yes, the deadline for Scotland was the same as for the rest of the UK: 30th November 2019.
Is Help to Buy: Equity Loan scheme also closing?
Yes, the Help to Buy: Equity Loan scheme is closing to new applicants in March 2021 and will be replaced by a new scheme that will run from April 2021 to March 2023.
The current scheme is only available for new builds in England and Wales. You’ll have to put down a 5% deposit and get a mortgage of 75%, then the government will grant you a 20% equity loan (or 40% if you live in London).
The new scheme will be open to first-time buyers only, and there will be property price caps based on your region.
Can I combine my Help to Buy: ISA with Equity?
Yes, you can use your Help to Buy: ISA to put towards your 5% deposit contribution.
For example, a new build costing £180,000 would require a £9,000 deposit. In one year, you can save a maximum of £4,250 with a Help to Buy: ISA (£3,400 of your own contributions plus £850 bonus). You can use the £3,400 for your initial deposit, so if you and your partner were to both save for a year, you’d have £6,800 to put towards your deposit plus £1,700 bonus.
For more information on how to get a Help to Buy: Equity mortgage, make an enquiry and we’ll match you with an expert for a free, no-obligation chat.
I’m too late for a Help to Buy: ISA, is there something else I can get?
Yes, there’s still a way for you to claim a 25% bonus from the government to put towards your first home – you can get a Lifetime ISA Savings Account (LISA).
Similar to a Help to Buy: ISA, a Lifetime ISA lets you save up to £4,000 per tax year, and the maximum bonus you can get is £1,000 (25% of £4k).
You can put this towards your first home, but unlike a Help to Buy: ISA, you can keep a Lifetime ISA afterwards and use it to help you save for retirement.
For more information about Lifetime ISA Savings Accounts and how to open one, visit our guide.
Is there a Forces Help to Buy deadline?
Yes, there is, though it has been extended by a further three years to 31st December 2022.
The scheme allows members of the Armed Forces to get on the property ladder by allowing personnel to borrow up to half of their wages to put towards their deposit and associated fees. It’s interest-free and a maximum of £25,000 can be granted, but only if they meet the criteria.
For more information about mortgages for members of the Armed Forces, see our guide.
Can I transfer my existing Help to Buy: ISA into a Lifetime ISA?
Absolutely. You can transfer all or a portion of your Help to Buy: ISA funds into a Lifetime ISA, though you won’t be able to add more than £4,000 into the LISA per tax year.
While there is no deadline to transfer your Help to Buy: ISA into a Lifetime ISA – and it is optional whether you do so or not – it may be wise to transfer your funds into a LISA if you do not plan to use your savings before the Help to Buy: ISA scheme closes off to paying out a bonus in 2030, as it would no longer benefit you.
If you’re unsure what the best course of action is for you, make an enquiry and the brokers we work with will run through all of the available options with you and make sure you’re paired up with the right lender for your needs and circumstances afterwards,
How do I put my Help to Buy: ISA towards my first home?
You can only use your Help to Buy: ISA to purchase a home worth a maximum of £250,000, or £450,000 in London.
When you make an offer on a property, you typically exchange contracts between 7-28 days before completion (move-in day). Your solicitor or conveyancer will then apply for the bonus (once you tell your provider you are closing your Help to Buy: ISA) and hand over your deposit to the mortgage lender in the exchange.
However, there is a clause when it comes to putting your government bonus towards your initial deposit. See below for more information.
Potential complications with your initial deposit
A potential drawback of the Help to Buy ISA is that the 25% bonus on your savings won’t be put towards your initial deposit and will only be granted to you once the sale is completed.
This means that the bonus is put towards part of the mortgage costs such as your mortgage payments, so, unfortunately, you cannot use it as part of your main deposit. It was designed this way to stop people from getting the bonus without actually buying a house.
However, this has left many people confused and uncertain about the type of mortgage they could get without the additional bonus from the government. But don’t fret – there are experts out there who can work with you to find great mortgage offers that accept smaller deposit amounts.
Can I still get a great mortgage deal without the larger deposit?
Absolutely. The experts we work with are specialists when it comes to finding the most competitive rates for those with different circumstances. They can also source lenders who accept smaller deposit amounts.
For more information about securing a mortgage with a smaller deposit, get in touch. We’ll match you with an expert who can offer you free, impartial advice related to your circumstances – and there’s no-obligation to take things any further.
*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA.Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.
Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes.
The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.
Pete's presence in the industry as the 'go-to' for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!
Read more about Pete here...
Find out more about mortgages with a Help to Buy: ISA