First-time buyers not sold on Help to Buy ISAs
The Government’s Help to Buy ISA launches on 1st December, but new research from money.co.uk shows that nearly half of first-time buyers plan to shun the products.
Designed to help wannabe homeowners save a deposit, the Help to Buy ISAs offer a free windfall of up to £3,000, due to the Government topping up your tax-free savings.
But while four out of five potential first-time buyers (79%) think Help to Buy ISAs are a good idea, nearly half (45%) do not plan to take the Government up on its offer of a free cash bonus.
The reasons for the rejection of the Government scheme are varied. Nearly a third of respondents said they have already paid into their cash ISA this year so they cannot open a Help to Buy ISA under the rules. A significant 29% were put off by all the terms and conditions, while 13% said they do not trust the Government to pay the bonus.
Hannah Maundrell, editor in chief of money.co.uk, said that although Help to Buy ISA rates were likely to be competitive, first-time buyers should be wary of providers targeting them to sell other products:
“Banks and building societies will inevitably use Help to Buy ISAs as an opportunity to cross-sell mortgages and other financial products. You need to be aware of this so you don’t play into their hands; when you come to buy it’s really worth comparing all the deals out there or it could cost you £1,000s.
“A mortgage is a long and expensive commitment and while your existing bank might seem like the easy option, it doesn’t mean they’re the best one; in all likelihood they won’t be.”