What is the ‘Help to Save’ scheme?

What is the ‘Help to Save’ scheme?

In January 2016 the UK Government announced the ‘Help to Save’ scheme. The new initiative, which is aimed at those on low income, has been created to reward those who save sensibly with bonuses of up to 50%. It is hoped that this will encourage people to save for a “rainy day fund”. This is also great news for first-time buyers as the scheme could help you get a deposit together quicker or perhaps give you more of a deposit available when you go to apply for your mortgage.

If you’re looking to take advantage of this Government scheme then there are a few things you should know to understand if you’re eligible and how to make the most of the initiative.

Am I eligible for the ‘Help to Save’ scheme?

Around 3.5 million people are estimated to be eligible for the scheme. If you’re a British citizen, receiving Universal Credit and working then you’re likely to be eligible too. The only requirement is your household income must be greater than 16 hours a week at the National Living wage which is approximately £6,365 per anumn.

Is there a minimum/maximum amount I can save?

You can save any amount up to £50 per month for a minimum of 2 years and a maximum of 4 years. This means you can have a maximum of £1,200 after 2 years and £2,400 after 4 years. It’s at the 2 and 4 year points you receive the bonus.

How does the bonus work?

At the end of 2 years you can claim your 50% bonus on the amount you’ve saved, so if you saved £50 per month (£1,200) then you would get a bonus of £600. If you then continue saving for a further 2 years you can get another 50% bonus, so potentially another £600 at the end of year 4.

What’s the catch?

At the moment it doesn’t look like there is one! The Government is currently saying that you will be able to use the money however you want and withdraw it whenever you like. So that means if you wanted to use it as a deposit for a mortgage you could.

How do I get started?

The Government expect the ‘Help to Save’ accounts to be available no later than April 2018. However it’s never too soon to start saving for the future, and if you start getting into the habit of putting a little aside each month now, not only will you already be used to saving when the opportunity of ‘Help to Save starts’, but you’ll also have made a great start to saving for your deposit!