FIRST-TIME buyers can boost their deposit with Tipton and Coseley Building Society's new Help to Buy Isa that pays a top rate of 2.6 per cent.
And if you live in the Midlands and have a postcode starting with B, DY, WS or WV you get an even higher 2.95 per cent.
The account pips previous market-leader Barclays, which pays 2.58 per cent.
So save £1,000 with Tipton, for example, and you'd have £1,029.05 after a year on the 2.95 per cent account, and £1,026 with the 2.6 per cent account.
Save the same with Barclays for a year and you'd have £1,025.80.
You can open the Tipton account both in branch or by post but you do need to deposit at least £10 and you can save up to a maximum of £500,000.
Top Help to Buy Isas
HERE'S how the top Help to Buy Isas compare, according to comparison site Moneyfacts:
- Tipton Building and Coseley Building Socity – 2.6 per cent (no transfers, interest paid annually, variable rate)
- Barclays Bank – 2.58 per cent (transfers allowed, interest paid monthly, variable rate)
- NatWest – 2.5 per cent (transfers allowed, interest paid monthly, variable rate)
- Ulster Bank – 2.5 per cent (transfers allowed, interest paid monthly, variable rate)
- Nationwide – 2.5 per cent(transfers allowed, interest paid annually, variable rate)
- Virgin Money – 2.5 per cent (transfers allowed, interest paid annually, variable rate)
- Buckinghamshire Building Society – 2.5 per cent (transfers allowed, interest paid annually, variable rate)
- Monmouthshire Building Society – 2.35 per cent (transfers allowed, interest paid annually, variable rate)
As with all Help to Buy Isas, you can stash away up to £1,200 in the first month of opening followed by £200 a month after.
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.
You need to save at least £1,600 to receive the minimum government bonus of £400.
Just bear in mind that Tipton's interest rate is variable, which means it can go up or down at any time, and it's paid annually.
Barclays' Isa is also variable although interest is paid monthly.
Tipton doesn't allow transfers in from other Help to Buy Isa accounts, so you can't have a Help to Buy Isa account open already – although you can with Barclays as it allows transfers.
Just be aware that while you can withdraw cash saved in Tipton's account – and in any other Help to Buy Isas – you can still only put in £200 a month.
Is a Help to Buy Isa better than a Lifetime Isa?
You can only open a Help to Buy Isa until November 30 2019, although if you've already got an account you can keep saving into it until November 30 2029.
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).
You can save up to £4,000 a year in a Lisa and the government will add 25 per cent on top.
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 Starter Homes website.
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 bigger house, with homes of under £450,000 or more available to first-time buyers with a Lisa.
With the Help to Buy Isa, there's a £250,000 limit or £400,000 in London.
But unlike the Help to Buy Isa, you can only withdraw cash to either buy your first home or when you reach 60 – there's no early access.
The top Lisa from Moneybox also pays a lower 1.4 per cent than the top Help to Buy Isa, as personal finance analyst Rachel Springall from comparison site Moneyfacts explains.
She said: “Providers appear to have been more supportive with Help to Buy Isas compared to Lisas."
Adding: "Once the Help to Buy Isa scheme closes this November, savers will be able to continue investing until the end of November 2029, but the government bonus must be claimed by December 1 2030.”
If you're debating which account to use, Martin Lewis reckons first-time buyers should at least open a Help to Buy Isa now even if they only put £1 in.
Those who you don't get the government deposit can then open a Lisa at a later date. See What is a Lisa? for more information.
We've rounded-up how the government schemes work and the other help available to first-time buyers.
Source: Read Full Article