does Help to Buy ISA make any sense?

crism · 7 January 2016 at 9:41PM

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Hi
Looking through the ISA rules I noticed, that maximum value of the property - to qualify for the 25% govt bonus - can't be more than £250k.
Now I am a first time buyer in the South - South East of England, where it is rather hard to get 2-3 bed and decent enough house below £250k. I work here, my better half as well, my kid is at a school, so moving elsewhere in the country where it may potentially be cheaper ( I doubt I will find such a place though) for now is not an option.

Unless I am missing something, it seems to me that if I'll sign up for this, then my only profit will be whatever the % H2B ISA provider will offer.

Also, what makes me wondering is: paying in the initial £1200 and then £200 every month, the isa should mature in about 4,5 years (maximum to save if I am not mistaken, is £12k) to maximize the 25% govt bonus. With current property prices hike it seems that the 25% bonus will simply offset what a given property will be worth in these 4,5 years time, placing me with my deposit exactly where I am now?

colsten · 7 January 2016 at 10:15PM

You have the right understanding of the scheme (see https://www.helptobuy.gov.uk/ for full details). Only you can say whether the HTB ISA will be of benefit to you.

Assuming you have no other ISA (and save your money in accounts that pay decent interest), I would think that two HTB ISAs, one for you and one for your wife, taken out at Halifax who pay 4% AER, would literally be a no-brainer. It gives you decent interest, and the option for a bonus for both of you. If you end up not applying for the bonus, you still have got nice interest on your deposits.

The rest of your money should go into 5% and 6% current and Regular Saver accounts.

crism · 11 January 2016 at 9:22AM

Thanks colsten, seems like a good idea, will definitely look into that!

pinkdalek · 11 January 2016 at 9:52PM

You are aware the scheme conditions may change in accordance with the chancellors budget?

Eg - the maximum monthly amount may be increased, the property price may be increased in accordance with house price index and overall costs.

It's worth saving, you never know what is around the corner, after all who is say your career could take you to a different part of the UK?

Flobberchops · 12 January 2016 at 12:57AM

I came to the same kind of conclusion about HTB ISAs. The £250k cap isn't particularly generous but the rate of interest is, and in my opinion the only circumstance where a Halifax HTB isn't a no-brainer is if you had a very large sum sitting around to invest long-term.

And hey, who knows, the property price cap may rise, as pinkdalek suggested.

Rich2808 · 13 January 2016 at 12:09PM

Yes the Chancellor may continue to promote policies which push up house prices even more in his never ending efforts to 'help' first time buyers while pricing them even further out of buying a home and forcing those who can go borrow even more so the Conservatives second biggest funders (bankers) make more money.

So the thresholds will potentially go up in time as prices go up even further out of reach.

And why is there a higher threshold in London and 40 per cent help to buy there - they have a Mayoral election they want to win and housing is a massive issue there and what should be a Tory demographic (young professionals isn't voting for them there. It really makes no sense otherwise - you don't get higher benefits or state pension or tax credits if you live in London.

I live on the London vs shire borders - prices are actually higher on the shire side.

Why is London so special - answers on a ballot paper on 5 May. Osborne is the consummate strategist - this isn't really about helping first time buyers. If he cared about them he wouldn't have brought in Carney to inflate house prices by 50 per cent.

colsten · 13 January 2016 at 1:48PM

Rich2808, do you really have to contaminate multiple threads with your rants? I think a lot of people would appreciate if you either stop or have your own rant thread that doesn't interfere with other people's questions and discussions.

does Help to Buy ISA make any sense?

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