By Columnist Mr Money Bags
I thought it may be worthwhile telling our readers about a new government incentive relating to the government helping people that want to get onto the property ladder. The government have introduced new ISA’s, where the government will pay a contribution if someone pays into the ISA.
The new accounts will be available to save for four years. A person can put £1, 000 initial deposit, and then monthly contributions of £200 per month. The government will top this up by £250 initially, and a further £50 per month on a monthly basis; therefore in total £12, 000 contributions made by a person equals to £15, 000 after a period of four years. A husband and wife can save £12, 000 each; therefore £24, 000 between them which equals £30, 000.
I like the incentive because it means anyone over the age of 16 who intends to buys a house can now save funds, and because they are saving the government is finally recognising the effort made by first time buyers to buy their first house, and is rewarding them.
So how does it work? Well as soon as you have a house in mind, you can cash in the ISA. The bank/building society where you saved will give you proof of your savings, and the solicitor that will deal with your house completion will be able to apply for the enhanced monies on your behalf from the government.
In the event that the house sale does not go through, you can simply return the funds to the bank/building society within a set period of time. This is usually within a year, however if you do not return the funds within one year, then you will lose the government enhancement, and will only get your money back.
I also like the fact the government has capped the bonus for properties purchased at £250, 000 outside London, and £450, 000 within London. I like this because it means those people that can afford to buy beyond this limit do not benefit, but instead this incentive is for people that are on a relatively reasonable salary, and are genuinely trying to save for a house.
So will it work, or is it just one of those government incentives? I think it will work because from the age of 16 onwards anyone can open the account, and other people such as parents can contribute into the ISA; therefore it is a good savings plan. It is a bit like a pension so those that save will be rewarded, and those that do not do so will not. I know which one I want to be, if I was buying my first house again. Let’s face it an extra £6, 000 for a couple means that money can be used for other things such as fees, furnishing etc.
