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With the Help to Buy ISA Scheme coming to an end- should a First Time Buyer (FTB) sign up before the

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Category: News
08 November 2019
According to statistics, FTBs make up 50% of the Scottish property market.   Of these, and as of  March of this year, £234,074 FTBs have utilised the Help to Buy ISA (HTB ISA) scheme since 2015. 

This scheme assists FTBs over the age of 16, who have never held an interest in a property before, to buy a principal residence in Scotland, up to the value of £250,000.   Through the scheme, FTBs can save up to £200 a month (although they can activate their savings by depositing a lump sum of up to £1200 in the first month) and the Government will help by boosting their savings by 25%.  Whilst the minimum bonus is £400 (meaning that a FTB will have to save £1600 before they will benefit), the maximum is £3000 (and to obtain that a FTB will have had to of saved £12,000). 

The bonus (which is sought by a solicitor) must be applied to the balance due on settlement and cannot be used towards a deposit due on the conclusion of missives. 

Couples purchasing together can utilise the scheme separately as long as they both qualify as FTBs, and parents can gift money to their children to enable them to save under the scheme, as long as the child opens the account in their own name.

Importantly, the HTB ISA scheme closes to new savers on the 30th November 2019.  However, if a FTB opens an account prior to this date, they will be able to save into it until November 2029 and must claim their bonus by 1st December 2030.

An alternative to the HTB ISA, is the Lifetime ISA (LISA).    Under this scheme, a FTB between the age of 18-39, can save up to £4000 per annum, receiving a monthly bonus of 25% on the amount saved, to enable a purchase of up to £450,000.  As such, a higher bonus can be obtained under this scheme (to a maximum of £32,000).

To utilise the LISA, the account must have been held for at least a year, unlike the HTB ISA scheme which enables a FTB to use their funds after 3 months.  However, the bonus can be applied to a deposit due on the conclusion of missives (as long as the transaction settles within 90 days of this date), or to the balance due on settlement.  Importantly however, if a FTB does not utilise their LISA to purchase a property, they will be charged large penalties on their own savings, instead of only losing the bonus amount, as would be the case with the HTB ISA.  

In summary, if you, or someone you know is a FTB, it would be beneficial to consider and compare both schemes and if the HTB ISA is preferable, ensure that the same is opened prior to the deadline.  
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