Under the terms of the scheme, which launched today, deposits are limited to £200 per month, except for the first month when customers can put in an extra £1,000.
The government will add 25% to the balance up to £3,000 when the holder purchases their first home; meaning savings of £12,000 could become £15,000.
So far the following banks and building societies have committed to offering Help to Buy ISA: Aldermore, Barclays, Bank of Scotland, Clydesdale Bank, Halifax, HSBC, Lloyds, Nationwide, NatWest, Newcastle building society, Santander, Ulster North, Virgin Money and Yorkshire Bank. Currently Halifax is offering the highest rate of interest at 4%.
Helen Bierton, head of savings at Santander, said: “Santander is really pleased to be supporting this important new government initiative to help first time buyers in the UK onto the property ladder.
“Our new Help to Buy ISA offers the opportunity to build a tax-free savings pot and then benefit from a boost to those savings with the government bonus.
“We are pleased to be able to help customers to save towards their most important purchase, with a preferential rate for our 1|2|3 World and Select customers.”
Once the account has a balance of £1,600 it qualifies for a government bonus, meaning even those purchasing a property within next three months could benefit from the scheme.
Each first-time buyer can have their own account; so a couple could receive a government bonus of up to £6,000.
Savers who have paid into a cash ISA held with Santander or another provider in this tax year can transfer the funds into the Help to Buy ISA subject to the Help to Buy ISA funding limits. Funds must be transferred in full and deposits can no longer then be made into the cash ISA.
