The H2B Isa will give people tax-free interest, and they will receive a contribution from the government of 25 per cent of the property value to go towards the deposit for their first home.
A minimum amount of £1,600 needs to be built up within the Isa to qualify for the government contribution, with the maximum boost being £3,000 for savings of £12,000 and above.
Help-to-buy Isas at a glance
Maximum initial deposit | £1,000 |
Maximum monthly deposit | £200 |
Maximum government contribution | £3,000 |
Minimum government contribution | £400 |
Account available to open for | The next four years |
Minimum term to secure bonus | None (but minimum value of £1,600 required to qualify for bonus) |
Term | Indefinite |
Maximum house purchase price | £450,000 London, £250,000 rest of UK |
Withdrawals | Permitted at any time (but government contribution is only made through a solicitor upon the purchase of new home) |
Source: HM Treasury/Tilney Bestinvest
Adviser view
David Smith, director of financial planning for London-based Tilney Bestinvest, said: “The H2B Isa is no doubt a well-intentioned policy, boosting savings for first-time buyers by 25 per cent, but it is not without limitations. There is no investment capability, with cash being the only savings option, and with interest rates as they currently are, growth will be limited.”
