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‘Help to buy’ ISAs

‘Help to buy’ ISAs

A new tax free savings account has been introduced to help first-time home buyers save up for the deposit on their purchase.

‘Help to buy’ ISAs are similar to cash ISAs, but benefit from a top-up from the Government. Savers, or their parents, can invest up to £1,200 initially and then up to £200 per month and the Government will then add a bonus of 25%, with a maximum of £3,000. So anyone who has invested £12,000 will have their investment topped-up with the maximum bonus of £15,000.

There are conditions attached. The property must be purchased for occupation by the ISA holder and cannot be rented-out; and it must be their only home. Also, the value of the property purchased must not exceed £450,000 in London or £250,000 elsewhere.

Bank and Building Society providers are already quoting attractive interest rates, but the 25% guaranteed return alone has been described as “just about the best risk-free investment rate out there”.

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