Santander has more than doubled the rate on its Help to Buy ISA to 4%, from today.

The rate applies to both new and existing customers, and those with an existing Help to Buy ISA elsewhere can transfer to Santander to receive the higher rate.

The Help to Buy ISA was launched in December as part of the Government’s new initiative to help people saving for their first home, and for every £200 saved the Government will pay a bonus of £50 to boost your deposit.

Helen Bierton, head of savings at the bank, said: “Santander is really pleased to increase our support for customers saving towards their most important purchase by offering a market-leading rate to help first time buyers in the UK onto the property ladder. Our new Help to Buy ISA offers the opportunity to build a tax-free savings pot and then benefit from a boost to those savings with the Government bonus.”

How it works

Savers can deposit up to £1,200 within the first calendar month of funding the account, and then up to £200 monthly thereafter. Once the account has a balance of £1,600 it qualifies for the government bonus, meaning even those looking to purchase their first property within the next three months could benefit from the scheme.

The Government will pay a bonus of 25% up to £3,000 per person, so boosting a Help to Buy ISA savings pot of £12,000 to £15,000, upon the purchase of a first home. Each first time buyer can have their own account; so a couple could receive a Government bonus of up to £6,000.