When do Help to Buy Isas stop and why are they being scrapped?
FIRST-time buyers can get up to £3,000 free cash when it comes to purchasing a home thanks to the Help to Buy scheme.
It rewards savers with a 25 per cent bonus to help them get on the property ladder.
But the scheme is being scrapped later this year, meaning that if you don't open an account soon then you could miss out on thousands of pounds.
Here's everything you need to know about Help to Buy Isa scheme, when it stops and why it's being scrapped.
What is a Help to Buy Isa?
An Isa is a tax-free savings account meaning that you can keep more of what you earn in interest on your cash.
A Help to Buy Isa is one that's backed by the government that will top up your savings to help you buy your first home.
The government will boost your savings by 25 per cent up to £3,000.
So for example, for every £200 you save the government will top it up by £50.
You can also earn interest on top of whatever you save. The rates are set by the bank that you've taken an account with and vary depending on the lender.
We've made a round-up of the best rates currently on the market here.
When do Help to Buy Isas stop?
The scheme is being scrapped from December 1, meaning you'll have to open an account by November 30 to benefit from the bonus.
If you decide to open an account, you'll need to claim your bonus by December 2030.
MoneySavingExpert Martin Lewis reckons it's worth opening an account before the deadline even if you have no intentions of buying a home.
The accounts can be opened with just £1 and you won't face a penalty for withdrawing cash early if you don't want to use it for the top-up.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy Isa - It's a tax-free savings account where for every £200 you save, the Government will add an extra £50. But there's a maximum limit of £3,000 which is paid to your solicitor when you move.
Help to Buy equity loan - The Government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property.
Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the website.
Why is the Help to Buy scheme being scrapped?
Ministers have decided to pull the scheme in favour of the Lifetime Isa (Lisa), which also gives buyers free government cash on savings worth up to 25 per cent.
The maximum free cash you can get over a lifetime is £32,000 but you can only use the money to buy your first home or to top up your pension when you're 60.
There are also fears that the Help to Buy scheme drove up house prices and only benefited the rich.
Official figures showed that the average earnings of someone who claimed the bonus earned £55,000 a year.
Are there any downsides to a Help to Buy Isa?
You can open an account with a maximum of £1,200 but after that you're limited to saving £200 a month into it.
If you want to save more than that in one month then you'll need to consider opening another account to maximise your saving.
But you're only allowed to save into one Isa account in a year so you'll be taxed on the interest you earn in another type of account.
The minimum bonus is £400 meaning that you'll need to save at least £1,600 in your Help to Buy Isa before claiming the top-up.
Another downside is that you'll only qualify for the top-up on a property with a purchase price of up to £250,000, or £450,000 in London.
The money comes through when you complete on the purchase of the property - and you can only get it if you're buying it with a mortgage.
The cash actually reaches your account but instead goes straight to your solicitors and is tied up in the purchase transaction.
It must be used towards your deposit or to cover the legal fees, such as solicitor's charges or stamp duty.
Lifetime Isa versus Help to Buy Isa - which is best?
The Lifetime Isa also gives a 25 per cent boost to your savings, but other terms differ, which makes choosing a winner complex.
You can save up to £4,000 in the first year with a Lisa, compared to £3,400 with a Help to Buy Isa.
This means that the maximum government bonus you'll receive after the first year is £1,000 in a Lisa, £150 more than a Help to Buy Isa.
Not many banks and building societies offer the Lisa though, so the interest rates on them aren't great - you'll earn more interest on a Help to Buy Isa.
For example, Barclays offers the top interest rate on a Help to Buy account at 2.58 per cent, compared to 1.40 per cent for Moneybox's market-leading Lifetime Isa.
Saving the maximum amount in a Lisa for 32 years would net you £32,000 of free government cash, which is more than you can get under the Help to Buy Isa.
You can also buy a pricier house, with homes of under £450,000 or more available to first-time buyers with a Lisa.
But unlike the Help to Buy Isa, you can only withdraw cash to either buy your first home or when you reach 60.
If you want early access you'll pay a 25 per cent penalty on the amount withdrawn, which means you'll lose £6.25 per each £100 you pay in.
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And with a Lisa you have to wait a year after opening the account to get the bonus on your first home.
You can actually open a Lisa and Help to Buy Isa at the same time, although you can only use the government top-up from one to help you buy a house.
If you do decide to use the government top-up on your Lisa to buy a house you won't be able to get it again when you come to retire