Holding an unused help-to-buy ISA? Here are your options

Mortgage loan

Posted by MoneyController on 05.04.2021

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The UK government offered its public help-to-buy ISA accounts with the added benefit of a free cash contribution towards buying their first house. Since the accounts did not have any strict initial deposit requirements, many people signed up. However, it’s now becoming clear that the number of unused help-to-buy accounts - accounts where people never deposited any money - could be very high. The revelation was made by the Nationwide building society, which claimed that most of the help-to-buy ISAs were opened just before the scheme was about to end. Since the scheme can be utilized until 2029, many people snapped up accounts before they were made unavailable. If other providers have the same ratio of unused ISAs, the total number of dormant help-to-buy ISAs could well be over a million!

What to do now?

If you are holding a help-to-buy ISA account and wondering what to do, worry not. First things first, you have until 2029 to utilize the benefits of the account. This means you still have ample time to plan your savings and target a specific date from now by which you want to utilize a certain amount of free funds that the government will put on top of your savings. The government is offering a 25% bonus on your savings. The maximum bonus you can utilize is 3000 pounds, for which you will need to deposit 12,000 pounds of your own savings. It is better to start early because the amount you can utilize per month is capped at 200 pounds and the allowance cannot be rolled over to next month. If you never deposited any money into your help-to-buy ISA, you can also utilize the lump sum amount of 1200 pounds that can be deposited in the first calendar month of use. There is no restriction on withdrawals from the account.

Transferring a help-to-buy ISA

Another thing you can do with your help-to-buy ISA is utilize the best interest rate available. You do not have to stick to one provider and can easily transfer your account between providers. HSBC for instance offers 1.75% interest up to savings of 12,000 pounds. To transfer your account to them, you have to hold one of the following three types of accounts: a current account, a Premier Savings account, or a Flexible Saver account. Newcastle building society is another provider that accepts transfers and pays 1.64% interest, though you have to appear at their branch in person to initiate the transfer. 

Irrespective of whether you forgot you had a help-to-buy ISA or simply didn’t get the time to plan your savings, it is never too late and with 9 years of the scheme still to go, you can start saving today and contribute towards building your first home down the road. Get in touch with your financial advisor for more guidance.

 

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