Martin Lewis warns first-time buyers to open a Help to Buy Isa now or risk losing out on thousands

FIRST-TIME buyers have been warned by Martin Lewis to open a Help to Buy Isa now or risk missing out on thousands of pounds worth of free cash.

The money saving guru says wannabe homeowners should open the savings account and even just stick £1 in it before they disappear for good from December 1.

1

Martin, who founded consumer site , said: "The easiest, simplest form of help for first-time buyers to build a deposit closes to new applicants on November 30 - now less than three months away.

"So if you may one day want to buy a home, consider opening one now with £1 or more, as then the facility stays available until 2029."

What are Help to Buy Isas?

Anyone over 16 who is thinking of buying a home for the first time can open a Help to Buy Isa.

You can deposit up to £1,200 into the account when you first open it, followed by up to £200 a month after that.

The government will then boost your savings by 25 per cent up to a maximum of £3,000 - so you'd need to save £12,000 to get this.

And you need to save at least £1,600 to receive the minimum government bonus of £400.

Just be aware though that there is a £250,000 limit on any property you buy outside of London using your Help to Buy Isa, or £400,000 in London.

But while you can only open a Help to Buy Isa until November 30, 2019, if you've already got an account you can keep saving into it until November 30, 2029.

You can also change your mind and withdraw cash at any point penalty free.

Is a Help to Buy Isa better than a Lifetime Isa?

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 is called the Lifetime Isa (Lisa).

But Martin explains that while the Lifetime Isa also gives a 25 per cent boost to your savings, other terms differ, which makes choosing a winner complex.

You can save up to £4,000 a year in a Lisa and the government will add 25 per cent on top.

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.

And with a Lisa you have to wait a year after opening the account to get the bonus on your first home.

You can only get the 25 per cent homebuyer's bonus on one of these accounts, although you can open both and then decide which to put the most cash into.

Martin said: "In summary, if you're 18 to 39, will definitely buy a qualifying home and won't buy within a year, go for a Lisa for the bigger bonus.

"If you're older, need to buy quickly or aren't 100 per cent sure you'll buy at all, a Help to Buy Isa is safer."

More on first-time buyers

BRIDGET PHILLIPSON

We’re backing young people with apprenticeships to get Britain growing

AT ANY RATE

Keir Starmer brushes off rising mortgage rates — blaming them on the banks

HOUSE THAT

UK house prices predicted to rise in 2025 at highest rate in four years

WOW SHED

I ploughed life savings into buying derelict cowshed and making it my dream home

Tipton and Coseley Building Society recently launched a new top-paying 2.6 per cent Help to Buy Isa for first-time buyers.

While Moneybox brought out a new top-rate 1.4 per cent cash Lifetime Isa for first-time buyers.

Plus, here's how first-time buyers can get a mortgage and the government schemes available.

We pay for your stories! Do you have a story for The Sun Online Money team? Email us at [email protected]