Martin Lewis’ last minute warning for first time buyers about Help to Buy ISA

The deadline for opening a Help to Buy ISA is fast-approaching, and Martin Lewis has now issued a warning for those wanting to buy their first property.

He explained on the Martin Lewis Money Show: “This is an urgent warning for savers and first time buyers – miss this and you could bemusing out on thousands of pounds worth of free cash.

“The Help to Buy ISA was launched four years ago to help first time buyers hoping to buy a property. It’s been a hot topic on our roadshow ever since.”

The founder of MoneySavingExpert’s last-minute warning goes out to all first time buyers, and anyone above the age of 16.

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The deadline to open the savings account falls on midnight, Saturday, November 30.

A Help To Buy ISA allows those who open it to get a 25% bonus on the savings they pay into the account.

But there is another government bonus scheme which people should know about – The Lifetime ISA.

Martin said: “Two years ago the Lifetime ISA launched – intended to replace the Help to Buy ISA. There are pros and cons of both.

“But time is at the essence and the lock is ticking on one.”

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So if you want the option of either accounts, you need to act fast.

Martin continued: “The big perk of the Help to Buy ISA is that the Government will give you 25% on top for a mortgage deposit if you’re going to buy a house in the near future. This is the most important thing you need to know.

“On the 30th November, the Help to Buy ISA closes to new applicants. You’ll no longer be able to get one.”

One of the main benefits of opening a Help to Buy ISA right now is that you have nothing to lose, even if you don’t end up buying a house.

Martin said: “The best bit is if you don’t buy a house, you don’t lose anything. You only need £1.”

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A customer on the road show asked: “If my son changes his mind, will he get his money back?”

Martin replied: “Yes, he won’t lose a thing.”

Keep in mind the government bonus is only accessible for first time buyers. This means, if you have owned, or part-owned a property anywhere you won’t qualify.”

You also have to be aged 16 to get a Help to Buy ISA, or 18 for the Lifetime ISA.

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What is the difference between a Help to Buy ISA or a Lifetime ISA?

Help to Buy is a good option for those who want to buy a home worth £250,000 (or £450,000 in London).

You can buy a home within three months of opening the account, and there are no penalties.

However, you won’t see any of the government bonus in your account. Your solicitor has to apply for the bonus after completion.

You can save up to £3,000 towards your first mortgage.

Meanwhile a LISA can help you save more money, and therefore you can gain a bigger bonus. And it will be paid directly into the account.

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The LISA allows you to save up to £4,000 every tax year towards your first home or retirement.

A government bonus of 25% will be added on top of what you save, meaning you could get £1,000 of free cash annually.

The con of this account is that there is a penalty for withdrawing it without using it for a first home or retirement.

You can read more about the Lifetime ISA or the Help to Buy ISA on the MoneySavingExpert website.

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