Barclays, Lloyds, Nationwide, NatWest, Santander and Virgin Money sign up to offer new Help to Buy Isa from December
- Scheme gives first-time buyers a boost when saving for a deposit
- Holders can save up to £200 a month, the Government will top up by 25%
- Couples are eligible if buying together meaning help of up to £6,000
- It will cost the government an estimated £45m in 2015-16, rising to £835m by 2019-20
Six major banks and building societies have signed up to offer the new Help to Buy Isa from December 1, the Chancellor has announced.
Barclays, Lloyds Banking Group, Nationwide, NatWest, Santander and Virgin Money have confirmed their participation in the scheme, which gives first-time buyers a boost when saving for a deposit on a home.
Starting on December 1, first-time buyers will be able to save up to £200 a month in a dedicated Isa that the Government will top up by 25 per cent, up to a maximum of £3,000.
We're in: Six major banks and building societies have signed up to offer the new Help to Buy Isa from December 1
People can also open their account with a one-off lump sum of up to £1,000 in addition to the monthly maximum.
Couples will be eligible if they are buying together, meaning a potential boost of up to £6,000 towards a deposit for a first home.
Chancellor George Osborne said: 'I'm delighted that so many British banks and building societies have already signed up to offer the Help to Buy Isa from December, which will reward thousands of people who are working hard to save for their first home by giving them a 25 per cent boost to their deposit savings.'
Recent figures from the Office for National Statistics show that a typical first-time buyer faces paying 5.1 per cent more for a property than they did a year ago.
The average price paid for a starter home in May was £211,000.
And data from the Council of Mortgage Lenders shows that the typical first-time buyer needed a deposit of 18.6 per cent in May.
Starting on December 1, first-time buyers will be able to save up to £200 a month in a dedicated Isa that the Government will top up by 25 per cent, up to a maximum of £3,000
The Government said the scheme has the potential to help every first-time buyer across the country, of which there are half a million a year.
However, only first-time buyers who are buying an owner-occupied home worth up to £250,000, or £450,000 in London will be eligible.
The scheme can be used in conjunction with any of the other ways the Government is helping people achieve their home-owning aspirations, including the other elements of Help to Buy and shared ownership schemes.
The Isas can be opened any time up to four years after the scheme launch, and people can save for as long as they want.
The deposit savings can be used for any residential home – existing or new build.
Savers only receive the bonus at the point at which the funds are used to buy a property.
Therefore if they decide to withdraw it and use it for something else, they will not receive the bonus.
Since savers can only pay in £1,000 upfront and £200 a month thereafter, an aspiring first-time buyer would have to hold the Isa for at least four months.
The Office for Budget Responsibility estimates that it will cost the government £45million in 2015-16, rising to £835million by 2019-20, although it warned there is ‘considerable uncertainty around the behavioural impact – in particular the take-up within the target population’.
Steven Cooper, CEO, personal banking, at Barclays, said: 'We look forward to launching our Help to Buy Isa later this year, helping future home-owners to achieve their ambitions.'
Stephen Noakes, managing director, retail customer products, at Lloyds Banking Group said the new Help to Buy Isa provides 'a genuine solution to the challenge of raising a deposit'.
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