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I have recently moved back in with my parents with a view of saving £500-600 a month to put towards a deposit on a house. I am looking at getting a Help To Buy ISA through one of the UK banking providers (essentially, the government will give you £1000 on every £3000 saved, up to a maximum of a saving of £12000). I have an active current account and an inactive (sub £2 balance) Cash ISA account.

From reading some material you can open the Help To Buy with up to £1,200 however the maximum you can put in is £200/month - obviously this somewhat negates the ability of mine to put 3x that away. Is the £200 a hard limit or can you put more in and only get credited against the first £200? Or will I need to open a Help to Buy ISA for the first £200 and the a regular savings ISA for the other amount I want to save?

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    The Government provide an extra 25% (£1000 on every £4000). The opening amount of £1,200 is a £1,000 lump sum (usually within first month of opening) plus the month's £200.
    – Workplace GDPR
    Oct 19, 2016 at 10:47
  • If you haven't already read it, here is HM Government's page detailing the scheme : helptobuy.gov.uk/help-to-buy-isa/how-does-it-work . As noted, 200 is the maximum you can deposit into the scheme each month. The bonus is 25% of the final value. The bonus is received by the solicitor handing your purchase.
    – not-nick
    Oct 20, 2016 at 5:01

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Is the £200 a hard limit or can you put more in and only get credited against the first £200?

I haven't tried it but I all the sources I've found suggest you cannot deposit more than £200. What happens if you do may be down to the provider you're with.

Do I have to put away £200 every month?
No. You don’t have to put money away every month and the amount you save into the account every month is up to you – as long as you don’t go over £200.
...
You can then deposit up to £200 any time

Source: https://www.helptobuy.gov.uk/help-to-buy-isa/faq/, emphasis mine

Or will I need to open a Help to Buy ISA for the first £200 and then a regular savings ISA for the other amount I want to save?

You cannot open more than one cash ISA in a given tax year, so you will not be able to open both of these. After opening your Help To Buy ISA, your options are essentially:

  • a Stocks and Shares ISA in which you are investing rather than saving, introducing a certain level of risk

  • a split ISA, which is a cash ISA and a Help to Buy ISA in the same 'wrapper'. In this case you would save your £200 a month into the Help To Buy portion and the rest into the cash ISA portion. Not all providers of a Help To Buy ISA will offer this, so you will have to shop around. Nationwide are an example of a building society who definitely do offer this.

A split ISA seems to fit more with what you are suggesting. Rather than pay into your Cash ISA portion (or your Stocks and Shares, if you go with that) straight away, you probably want to first max out your cash in a high-interest bank account as the interest you'll get there probably exceeds what you'd get in an ISA.

There is a general "template" available here which suggests the order in which you should save your money, and Cash ISAs are fairly low down. There are more efficient ways to save before you deposit into a Cash ISA, so you should look to maximise those first. That said, there is no harm in opening a Split ISA with the intention of paying in to the Cash ISA portion of it later.

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In the first month of the help to buy isa being open you have an additional £1000 deposit allowance. Every month the maximum is £200, you can pay less if you like but never more.

It is only the first month you can deposit more as you have the £1000 additional limit meaning you can deposit £1200 (bonus + regular) in the first month.

Also if you have a help to buy isa you wont be allowed to open a regular isa, this is pretty standard (1 isa per financial year).

IMO your best option it to open a help to buy isa putting as much as you can in the first month up to the £1200 initial limit then put any remaining funds into a good current account that gives a favorable interest rate.

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  • there is a lot of help on this subject on the government website, a quick search will answer most of your questions
    – LiamHarries
    Oct 20, 2016 at 14:33
  • There are much better places for any remaining funds than a current account. A savings account for example...
    – AndyT
    Oct 20, 2016 at 16:08
  • @AndyT I don't know if you have experience of the UK banking system but, currently at least, certain current accounts offer some of the best interest rates on less than a few thousand pounds. NationWide's FlexDirect account offers 5% on up to £2.5k. There are regular saver accounts which offer a comparable interest rate but you would have to drip feed your cash in to them and they're much less flexible.
    – Michael
    Oct 21, 2016 at 9:31
  • @AndyT as Michael says current accounts offer very good rates. Personally I use 2 current accounts (1 for spending, 1 for saving) and just transfer any money I have at the end of the month into account 2. this way I get a similar if not better rate than with a savings account with the added flexibility to move money around as i need without worrying about clauses where I could lose interest.
    – LiamHarries
    Oct 21, 2016 at 11:16

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