Santander’s new Help to Buy ISA rate is now available from today.

The Help to Buy ISA, launched in December as part of the Government’s new initiative to help people saving for their first home, will now pay a tax free interest rate of 4.00% to both new and existing customers.

Customers who already have a Help to Buy ISA can also transfer to Santander‘s ISA to take advantage of the higher rate.

Helen Bierton, head of savings at Santander, said: “Santander is really pleased to increase our support for customers saving towards their most important purchase by offering a market-leading rate 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.”

Savers can deposit up to £1,200 within the first calendar month of funding the account, and then up to £200 monthly thereafter. Once the account has a balance of £1,600 it qualifies for a government bonus, meaning even those looking to purchase a property within the next three months could benefit from the scheme.

The government will pay a bonus of 25% up to £3,000 per person, so boosting a Help to Buy ISA savings pot of £12,000 to £15,000, upon the purchase of a first home. 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.