You DO NOT want to invest in stocks for 5-year time frames. That's general, not UK, advice. You want guaranteed, government-backed-insured stuff (ie, if the bank folds, your money will still be safe - any normal bank account, bank savings account etc will be fine up to 85k GBP I think it is, maybe it's gone up to 100k not sure).
I don't know the specifics or gotchas of this new ISA stuff. How much are houses where you are?! 13k salary doesn't sound like it'd support much of a mortgage (that's not meant to put you down, just the truth). Even at 4x, you'd only be borrowing 52k max.
But yeah, if the government is going to give you a free top up for nothing, go for it. Are you sure it isn't only for new-builds or something?