Sign up for a first home ISA

PEOPLE hoping to buy their first home can start saving for a deposit by signing up for a new account from today.

Banks are offering the Help to Buy ISAs announced by Chancellor George Osborne in his Autumn Statement last week.

If savers put away the maximum of £200 a month for five years – £12,000 in total – the Government will give them a tax-free £3,000 bonus but only if it goes towards the deposit for a home.

However, the price of the property is capped at £250,000 or, in London, £ 50,000.

Martin Lewis, founder of MoneySavingExpert.com, called them a ‘no-brainer for anyone saving for a home for the first time’.

But soaring house prices could mean the scheme will not go far enough to help young buyers. If prices rise over the next five years at the same rate as they have in the past five, homes in most of the southeast and southern England will be beyond the Government price caps.

Alastair Douglas, of comparison website TotallyMoney.com, said: ‘With ever increasing house prices, the Help to Buy ISA will not suffice.’ The accounts are for individuals, meaning a couple can open one each.