Help to buy isa what is it used for?

Shez858 · 20 August 2017 at 3:11PM

Help!

All information online is based on people with 10% deposit and we only have 5%. I am looking for a no frills, dummy guide answer as I have asked for this from the solicitor and had the not so helpful reply that "I will get a completion statement at the end" all well and good except the answer to the question will answer if we can even complete or not. So here goes.....

Our purchase price= £300,000
Mortgage offer= £285,000
Deposit= £15,000
Stamp duty= £5000
Solicitors fees= £1500

We have a help to buy bonus of £2500.

What can this be used for?
Does it mean we will only need to pay £4000 on top of the £15,000?
Will the mortgage taken out only be £282500?

If it is not taken off stamp duty, solicitors fees etc we can not afford the house as it being taken off our mortgage will not help us as we don't have an extra £2500 for fees.

Help please

Jaglad111 · 20 August 2017 at 3:28PM

As far as i am aware the bonus is paid on completion and can be used toward solicitors fee's or stamp duty. If things are very tight you can sort the stamp duty yourselves, you have 30 days from completion to pay it so may get you through to another payday and reduce the financial stress.

I am assuming you are buying in london as the bonus is only payable on purchases below 250k everywhere else in the UK?

eskbanker · 20 August 2017 at 4:04PM

Jaglad111 wrote: »

As far as i am aware the bonus is paid on completion and can be used toward solicitors fee's or stamp duty.

No, this is not true - the HTB bonus must be used towards the value of the property itself and so can't be used for other fees and duties.

Jaglad111 · 20 August 2017 at 4:08PM

Isnt that the HTB Lisa bonus? The isa bonus can not be claimed until completion so can't be used as part of the deposit, although the funds held will be released before that and can form part of the deposit.

marliepanda · 20 August 2017 at 4:14PM

eskbanker wrote: »

No, this is not true - the HTB bonus must be used towards the value of the property itself and so can't be used for other fees and duties.

Its added to the balance on completion so can be used for fees, not stamp duty as that's paid on completion so wouldn't quite work I don't think.

BUt people can def use it for fees.

Jaglad111 · 20 August 2017 at 4:24PM

Having just read up on the amended government guidence it appears it can be used for mortgage deposit and can be applied for after exchange but before completion, with an accelerated process for those very close to completion which doesn't require the account closure paperwork to proceed.

I have an htb isa, would of been nice if the provider had sent out a notification letter when the government amended/clarified its stance. Never mind, you live, you learn.

alex_163163 · 20 August 2017 at 5:11PM

No, the bonus money will not come off the mortgage. The mortgage amount you have an offer for is the amount that will be released to your solicitor.
So the bonus will be in addition to your £15k deposit?
Don't worry about it is what I will say. The completion statement that comes through will document all monies owed and transacting so just think about it all as one pot of money. The bonus is effectively reembursing you part of the money you saved and paid on exchange, so you can use this re-embursed money to pay the stamp duty and fees. Hope that makes sense? Can't think how to word it!

eskbanker · 20 August 2017 at 5:14PM

Jaglad111 wrote: »

Isnt that the HTB Lisa bonus? The isa bonus can not be claimed until completion so can't be used as part of the deposit, although the funds held will be released before that and can form part of the deposit.

marliepanda wrote: »

Its added to the balance on completion so can be used for fees, not stamp duty as that's paid on completion so wouldn't quite work I don't think.

BUt people can def use it for fees.

My point isn't about timing - there's no dispute that the bonus is made available at completion! However, it must be used towards the purchase price of the property, not fees or stamp duty, as per https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/:

The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

Clause 7.6(A)(v)(a) of the scheme rules mandates that the conveyancer must declare that

the entire amount of the Bonus along with any accrued interest will be applied towards the acquisition of the property

LuckyG · 22 August 2017 at 4:58PM

We used the HTB isa and received a cheque from the solicitor a few days after completion.
I didn't use it towards the purchase of our house though as everything was already paid.

kingstreet · 22 August 2017 at 5:14PM

eskbanker wrote: »

My point isn't about timing - there's no dispute that the bonus is made available at completion! However, it must be used towards the purchase price of the property, not fees or stamp duty, as per https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/:Clause 7.6(A)(v)(a) of the scheme rules mandates that the conveyancer must declare that

Trust me when I say this.

The bonus gets added to the pool of funds at completion. It is inevitable it gets used for SDLT and legal fees despite what the rules say.

Have a read of this for some real life stuff;-

http://forums.moneysavingexpert.com/showthread.php?t=5582683

diggingdude · 22 August 2017 at 7:11PM

My solicitor informed me it will go into the general pot and I will be getting a refund. I don't care how he accounts it, when a purchase goes through I want a free holiday

Help to buy isa what is it used for?

Comments

Categories

Get our FREE Weekly email full of deals & guides - and it’s spam-free