Banks woo first-time home buyers ahead of 'Help to Buy' Isa scheme launch

The Isa scheme is aimed at first-time buyers Credit: Peter Byrne / PA Archive/PA Images

First-time buyers saving into the government's new 'Help to Buy' Isa scheme will be offered rates as high as 4 per cent by some banks.

With the scheme due to be launched next week, lenders have started to unveil details of the products they will be offering under the initiative.

Halifax revealed it will offer people saving into the scheme an annual rate of interest of 4 per cent.

Nationwide Building Society and NatWest have both said they will offer rates of 2 per cent.

Other providers - including Barclays, Santander and HSBC - will also be taking part and are expected to announce their offers soon.

The interest rates on Isa deals are variable and could change.

The scheme is part of the government drive to get more people on to the housing ladder.

But experts have warn that plan must not leave those who are not home owners without somewhere affordable to rent.

  • What are Help to Buy Isas?

They are savings accounts aimed at people trying to build a deposit to buy their first home.

From 1 December, first-time buyers saving for a deposit will be able to put up to £200 a month in a dedicated Isa that the government will top up by 25 per cent.

The maximum government bonus a saver can receive is £3,000.

The minimum government bonus is £400, meaning that you need to have saved at least £1,600 into your Help to Buy Isa before you can claim your bonus.

  • Can I open a Help to Buy Isa with someone else?

No, couples buying together can combine their bonuses and you can put more than one government bonus towards the home you are buying.

So, if you are buying a home with someone else who is also a first-time buyer, they can open and save money into their own account and you will both receive a government bonus.

  • How many Help to Buy Isas can I have?

Only one at any one time. Unlike cash Isas, you cannot open a new Help to Buy Isa every year, but you will be able to transfer it from one bank or building society to another.

  • How long will Help to Buy Isas be around for?

You will be able to open a Help to Buy Isa until November 30 2019. After that date they will not be available to new savers, but if you opened your Help to Buy Isa before then you can keep saving into your account.

You must claim your bonus by 1 December 2030.

  • Do I have to take my mortgage out with my Help to Buy Isa provider?

No, you can take out a mortgage wherever suits you best.

  • Can I use the Help to Buy Isa with any other Government housing schemes?

Yes, you can use it alongside other Help to Buy mortgage schemes aimed at helping people who only have a small deposit saved. You will need to check the requirements of the scheme you want to use.