Help to Buy ISA: what it is, how to apply and rates for first-time buyers

Help to Buy ISA: what it is, how to apply and rates for first-time buyers

Help to Buy ISAs are designed to help first-time buyers get onto the property ladder. Here we explain what rates are on offer and how to apply.

Reena Sewraz

Mortgages and Home

Reena Sewraz
Updated on 6 April 2017

Help to Buy ISA - what is it?

Help to Buy ISAs work like a normal Cash ISA in that you can save money without the taxman taking a cut.

You can save a maximum of £200 a month or £2,400 a year. To help kickstart your savings you can put in up to £1,200 when you first open an account, which counts towards your overall annual ISA allowance of £20,000. 

The best thing about a Help to Buy ISA is that when you come to use the money you’ve saved to help you purchase a property; the Government will boost your savings by 25%. 

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How much can I save in a Help to Buy ISA?

These accounts are designed to take regular, monthly contributions.

When you open a Help to Buy ISA you can make an initial lump sum deposit of up to £1,200. After that you make monthly deposits of up to £200.

The minimum bonus the Government will pay is £400. This means you need to save at least £1,600 before you buy a house to benefit. 

The maximum bonus you can get is capped at £3,000. To get that you'll need to have saved £12,000.

Can anyone open a Help to Buy ISA?

To qualify for a Help to Buy ISA you must be aged over 16 and have never owned a property before.

Everyone who hasn’t owned a home before is entitled to a Help to Buy ISA so if you are buying a house as part of a couple, or with friends or siblings you can increase your Government bonus by opening separate accounts.

A couple who each opened a Help to Buy ISA and saved the full £12,000 would get a Government bonus of £6,000.

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Can I open a Cash ISA in the same year?

The rules state that you aren’t allowed to pay into a Cash ISA and a Help to Buy ISA in the same tax year.

If you've already paid into a Cash ISA this year you must transfer your active Cash ISA to a Help to Buy ISA, but only up to £1,200. Anything over this amount would have to be moved into a Stocks and Shares ISA, Innovative Finance ISA, Lifetime ISA or a non-ISA account.

Those with a Help to Buy ISA will be able to transfer what they have saved into the Lifetime ISA in 2017 or continue to save into both separately. However, you will only be able to use the bonus from one scheme to buy a house. For more read: Lifetime ISA: where to get one, savings bonus and age limit.

One way around this is to go for a portfolio ISA which allows you to hold multiple ISA products within a Cash ISA wrapper. Nationwide, Ulster Bank and Newcastle Building Society offer this sort of split ISA.

What size property can I buy?

The money held in a Help to Buy ISA can only be used towards buying a property worth up to £450,000 in London or up to £250,000 in the rest of the country.

How do I claim the bonus?

To get your Government bonus you need to close your Help to Buy ISA.

Your bank or building society will then give you a closing letter which you pass on to the solicitor who is helping you buy your home. They can then apply online to receive your bonus money to use to complete the deal.

The Government bonus is paid once it is certain your property transaction will go ahead. This means your solicitor will claim the bonus between exchange of contracts and completion.

This means you won’t have the bonus money available to help cover what’s called the ‘exchange deposit’ this is usually 10% of your overall deposit and paid to seal the deal.

Make sure you have enough to cover this amount without the Government bonus or see if you can negotiate to lower the exchange deposit amount with the help of your solicitor.  

If you think this might e tricky you might be better off with the Lifetime ISA. As under the rules of this scheme savers are given up to 90 days  to withdraw funds to complete a house purchase. This allows you to use both your own contributions and the Government bonus for the initial deposit.

Will I be able to rent out my property?

One thing you should watch out for when considering using a Help to Buy ISA is that the home you purchase must be your main residence and cannot be rented out or used as a holiday home.

If you are trying to buy the property for the sole purpose of renting it out the Government can claw back the bonus you were paid.

However, the Government says that it won’t take this sort of action if your personal or professional circumstances change.

The Treasury has confirmed that it will take a common sense approach if your personal circumstances change and it is clear the property wasn’t bought with the intention of renting out.

A Treasury spokesperson said: “The intention of the Help to Buy ISA policy is to provide support to first-time buyers who are struggling to take the first step on the housing ladder. In order to receive a government bonus the individual in question must make a declaration at the time of purchase that they intend to live in the property as their sole residence.

“We recognise, however, that an individual’s personal circumstances may change at some point in the future, in which case they may need to rent out their property. The government is clear that it will not claim Help to Buy ISA bonuses back from people whose personal or professional circumstances have changed and who need to make different arrangements for their property, for example if their employment status or family circumstance changed.

“However, in accordance with the rules of the Help to Buy ISA scheme, if a person claims a Help to Buy ISA bonus and does not intend to make the property their home, the government will seek return of the funds."

What rates can I get on a Help to Buy ISA?

Here are some of the top rates on offer for Help to Buy ISA accounts.


Help to Buy ISA rate

Penrith BS


Cumberland BS


Tipton & Coseley BS


Darlington BS




Buckinghamshire BS


Vernon BS


Progressive BS




Progressive BS


Virgin Money









up to 2%*

Ulster Bank


Yorkshire BS


Chelsea BS


*Only Santander 123 World or Santander Select customers get the top rate of 2%

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This article is regularly updated

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