Help to Buy catch has left thousands of first-time buyers forced to borrow cash or delay their house purchase
Tens of thousands of first-time buyers have been forced to borrow cash from friends and family, or delay their house purchase, because of a major flaw with the Help To Buy Isa.
The Government scheme allows people to make an initial deposit of £1,200 and save £200 a month thereafter.
They then receive a 25 per cent boost when they buy their first home.
Catch: Under the Help to Buy scheme the Government’s 25 per cent boost is not paid until after contracts are exchanged
But few realise that this bonus is not paid until after contracts are exchanged, which means it cannot go towards the deposit.
Around 55,000 first-time buyers have been caught out, according to a Freedom of Information request by OneFamily BS.
Half had to borrow money to plug the average £1,400 gap.
‘The Isa is not fit for purpose, which is, in part, why it’s closing to new customers in November,’ says Nici Audhlam-Gardiner, of OneFamily.
HM Treasury says it pays out bonuses after exchange, once it is certain the transaction is going ahead.