By Hayley Robins, Senior Accountant at Hive Business.
You may have recently discovered that the government’s Help to Buy ISA we blogged about in November last year, may not actually be that helpful!
First time buyers got very excited when George Osborne announced the new ‘Help to Buy ISA’ in his March 2015 budget, a welcome helping hand for those saving for a deposit and hoping to get on the property ladder.
To recap: We were told that the government would add 25% to your savings pot where savers contributed up to £200 per month. That’s £600 in your savings pot each year for FREE, courtesy of the Conservatives…it sounded almost too good to be true!
At the time not a lot of detail was given on how first time buyers would get their hands on this 25% bonus. It has since emerged that savers won’t receive the extra Government money until after the purchase has been completed. This means that the 25% Government contribution evidently can’t be used towards a deposit as we were originally lead to believe!
Understandably, this has not gone down particularly well with people who were counting on these contributions and we’ve experienced this all first hand as our Digital Designer Karl recently used the scheme. I asked him what he thought about it at the time: “I was pretty disappointed when I discovered that the money wouldn’t be paid out to use as a deposit. My partner and I had been doing the scheme for less than a year so the amount wasn’t life changing but it was a leg up we needed. Thankfully our solicitor took the money off their final bill which was definitely better than a poke in the eye! I can understand why people who need the money for the deposit itself are quite frustrated by this revelation.”
So although you will still receive a helping hand from the government it may not come at the optimum time. First time buyers will still need to save the full deposit themselves however, the Government bonus could be used to help pay the legal costs of purchasing your first house and help ease the financial stresses of purchasing a home.
If you are a self-employed dentist and you would like to discuss how you could start saving to purchase your first home then please call us on 01872 300232 or email us at hello@hivebusiness.co.uk.
