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New ISA to help first time buyers

A new type of ISA will provide a financial boost to people saving to buy their first home, the Chancellor has announced during his 2015 Budget statement.

For every £200 deposited into a Help to Buy ISA, the government has pledged to boost it by 25%. This means that first time buyers will receive £50 for every £200 they save towards their house.

There will be a maximum savings limit of £12,000 which would result in account holders receiving a savings bonus of up to £3,000.

Key information:

  • there is no minimum monthly deposit amount
  • the maximum monthly deposit amount is £200
  • account holders will be able to make a £1,000 initial deposit
  • accounts are limited to 1 per person rather than 1 per household.

Accounts will be available from autumn 2015 and will be open to first time buyers over 16 years-old.

Nida Broughton, chief economist at the Social Market Foundation, said:

"Our analysis on wealth and assets shows that whilst the average deposit put down by first time buyers has been rising, the amount 26-35 year olds have in savings is falling. Around 37% have no savings at all. Among those that do, the median amount is just over £2,000. The Help to Buy ISA is aimed at this group of people struggling to get on the housing ladder."

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