28th November 2015
Halifax has launched its first Help to Buy ISA offering a rate of 4% on deposits.
First-time buyers, aged 16 and over, are eligible to save into the new ISA, which has been set up under a government scheme to help people save for a property.
Deposits are limited to £200 per month, except for the first month of opening the account when an extra £1,000 can be saved. The government then adds 25% to the closing balance of the account up to a maximum of £3,000. This top up from the government is paid when the account is closed, as part of the conveyancing process.
Although one person can have just one account and receive just one bonus, joint buyers can use their combined savings and bonuses for a deposit.
The Halifax Help to Buy ISA will pay 4% in interest, and according to Halifax figures, savers depositing the maximum amount into the ISA over five years could turn £13,000 into £17,500.
Nearly half (48%) of first-time buyers said they are likely to open a Help to Buy ISA. The extra bonus is good news for savers as 52% of first-time buyers cite deposit as the main thing preventing them from buying a property although one in three said they were confident of owning their own home in the future.
Two-fifths of prospective first-time buyers are saving towards their deposit and putting away an average of £33.35 a week.
Many savers are concerned about their chances of buying a property with nearly one in three saying they don’t think they will be able to get a mortgages and 42% worrying about how long it will take them to save for their first home.
Four in 10 worry they will never be able to afford to buy their own home.
Giles Martin, head of Halifax savings, said: ‘It is clear from our research that while some people are still worried about the challenge of saving for a deposit, many see the new Help to Buy ISA as a genuine solution, with half of prospective first-time buyers intending to open an account.
‘For those looking for an incentive to save regularly, opening this account, with a 4% interest rate from Halifax and a 25% government bonus, will make what they do save work much harder for them.’
Savers putting in £33.35 a week and funding the extra £1,000 on opening would turn their £2,734 into £3,516 within 12 months, including annual interest and the government bonus.
People are, on average, will to save for 5.3 years to save for a deposit and after five years, the total deposits of £9,670 would increase to £13,543.
Those able to save the full £200 per month plus the £1,000 opening bonus would deposit £13,000 over five years and the pot would increase to £17,524 including interest and the government bonus.