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    • chamelious
    • By chamelious 11th Oct 16, 2:19 PM
    • 42Posts
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    chamelious
    Help to buy ISA - Deposit issues
    • #1
    • 11th Oct 16, 2:19 PM
    Help to buy ISA - Deposit issues 11th Oct 16 at 2:19 PM
    Hi all, my GF and i are currently saving for our first house and were counting on the 25% bonus from the Help to buy ISA scheme. Can anyone help me understand this article:

    http://www.telegraph.co.uk/personal-banking/savings/help-to-buy-isa-bonus-buyers-had-no-idea-it-wasnt-for-a-deposit/

    From what i can see, it means basically we can't use the HTP ISA for the deposit, which is confusing, what else can it be used for?
Page 1
    • Ed-1
    • By Ed-1 11th Oct 16, 2:45 PM
    • 1,498 Posts
    • 810 Thanks
    Ed-1
    • #2
    • 11th Oct 16, 2:45 PM
    • #2
    • 11th Oct 16, 2:45 PM
    Hi all, my GF and i are currently saving for our first house and were counting on the 25% bonus from the Help to buy ISA scheme. Can anyone help me understand this article:

    http://www.telegraph.co.uk/personal-banking/savings/help-to-buy-isa-bonus-buyers-had-no-idea-it-wasnt-for-a-deposit/

    From what i can see, it means basically we can't use the HTP ISA for the deposit, which is confusing, what else can it be used for?
    Originally posted by chamelious
    It is used for a mortgage deposit, not the deposit that has to be given to the seller at exchange of contracts.
    • chamelious
    • By chamelious 11th Oct 16, 2:47 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    • #3
    • 11th Oct 16, 2:47 PM
    • #3
    • 11th Oct 16, 2:47 PM
    Can you clarify please? I was only aware of one deposit being required when purchasing a house.
    • Mogley
    • By Mogley 11th Oct 16, 2:58 PM
    • 65 Posts
    • 56 Thanks
    Mogley
    • #4
    • 11th Oct 16, 2:58 PM
    • #4
    • 11th Oct 16, 2:58 PM
    Point 10 in this link http://www.moneysavingexpert.com/savings/help-to-buy-ISA
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • chamelious
    • By chamelious 11th Oct 16, 3:06 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    • #5
    • 11th Oct 16, 3:06 PM
    • #5
    • 11th Oct 16, 3:06 PM
    I'm still confused.

    " At this point the seller will usually ask you to put down a 10% deposit (sometimes it can be negotiated lower to 5%) to secure the property. "

    So your house is 100k. You pay for your 10% at 10k, the "home exchange deposit" . What is left to pay now? What is the second deposit?
    • kingstreet
    • By kingstreet 11th Oct 16, 3:21 PM
    • 30,036 Posts
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    kingstreet
    • #6
    • 11th Oct 16, 3:21 PM
    • #6
    • 11th Oct 16, 3:21 PM
    If you have agreed to put down 10% ahead of exchange of contracts, that is what you do.

    If you are contributing more to the purchase, you do that ahead of completion when you also hand over balance solicitor fees and stamp duty.

    FWIW the thing you cannot use towards your deposit ahead of exchange of contracts is the HTB ISA bonus, not the HTB ISA investment.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • chamelious
    • By chamelious 11th Oct 16, 3:27 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    • #7
    • 11th Oct 16, 3:27 PM
    • #7
    • 11th Oct 16, 3:27 PM
    Why would you contribute more in the short amount of time between exchanging contracts and completion?
    • kingstreet
    • By kingstreet 11th Oct 16, 3:28 PM
    • 30,036 Posts
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    kingstreet
    • #8
    • 11th Oct 16, 3:28 PM
    • #8
    • 11th Oct 16, 3:28 PM
    If, for example, you want to pay 50% deposit on your new purchase, you put down 10% ahead of exchange and pay the rest ahead of completion.

    Exchange and completion may not be close together. We are newbuild specialists and these are often six months apart.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • chamelious
    • By chamelious 11th Oct 16, 3:39 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    • #9
    • 11th Oct 16, 3:39 PM
    • #9
    • 11th Oct 16, 3:39 PM
    I highly doubt any first time buyers are putting down 50%, and if they are they aren't going to care about stuff like this.
    • kingstreet
    • By kingstreet 11th Oct 16, 3:43 PM
    • 30,036 Posts
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    kingstreet
    Your supplementary questions caused the thread to move away from the substantive issue of the HTB ISA into other areas.

    The answers given weren't designed purely for the HTB ISA fraternity alone as others may read this later and see something they find useful.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • chamelious
    • By chamelious 11th Oct 16, 3:45 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    Fair enough. I guess i join a large community of first time buyers frustrated by this.
    • Mogley
    • By Mogley 11th Oct 16, 3:47 PM
    • 65 Posts
    • 56 Thanks
    Mogley
    I'm not an expert and posted the link as I remembered reading it recently. I understand it as this.
    There is no second deposit.


    The Mortgage provider requires 10% deposit. You can apply for a mortgage to include the governments contribution. You would only need £8k in your HTB ISA to achieve 10% mortgage deposit on £100k.
    The seller would like 10% to exchange contracts. This is the money you have personally saved. You would need £10k to exchange contracts on £100k house. You cannot count the government contribution in the amount to exchange contracts. So your £8k in the HTB ISA would need to be topped up with savings from elsewhere to achieve your £10k "home exchange deposit". On completion, your solicitor will apply to get the 20% (£2k) contribution to the final sale to complete the 10% required for your mortgage.


    I hope this makes sense.
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • kingstreet
    • By kingstreet 11th Oct 16, 3:47 PM
    • 30,036 Posts
    • 15,965 Thanks
    kingstreet
    Fair enough. I guess i join a large community of first time buyers frustrated by this.
    Plenty of discussion on this subject on HBR&S.

    As it's not directly related to mortgages it's mostly appeared over there.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • chamelious
    • By chamelious 11th Oct 16, 3:54 PM
    • 42 Posts
    • 2 Thanks
    chamelious
    "The Mortgage provider requires 10% deposit. You can apply for a mortgage to include the governments contribution. You would only need £8k in your HTB ISA to achieve 10% mortgage deposit on £100k.
    The seller would like 10% to exchange contracts. This is the money you have personally saved. You would need £10k to exchange contracts on £100k house. You cannot count the government contribution in the amount to exchange contracts. So your £8k in the HTB ISA would need to be topped up with savings from elsewhere to achieve your £10k "home exchange deposit". On completion, your solicitor will apply to get the 20% (£2k) contribution to the final sale to complete the 10% required for your mortgage."

    But, you've already paid your 10%, with the 8k and 2k you've pulled from elsewhere? When you get to completion, where has the extra 2k gone? Surely the 2k extra makes your deposit 12k in total?
    • Mogley
    • By Mogley 11th Oct 16, 4:01 PM
    • 65 Posts
    • 56 Thanks
    Mogley
    Yes you are correct. The deposit would be £12k total and be a 12% deposit. This is the frustration people have with the HTB ISA. Effectively all the government are doing is giving you a contribution to the value of your house of 20% of the value you've saved in a HTB ISA. It does not help when you actually need it at the point of exchange of contracts. In the long term it is equity given for free by the government.
    You should pay attention to the needs of the moment - otherwise there is no future. But to ignore the future is foolish - living solely for the moment leaves nothing for when the next moment arrives.
    • GLM71093
    • By GLM71093 11th Oct 16, 4:35 PM
    • 15 Posts
    • 8 Thanks
    GLM71093
    Hi,
    Me and my partner just brought our first house two weeks ago. We initially thought we could use the 'bonus' as a part of our deposit too but couldn't. Our solicitor applied for the bonus for us and then put it towards what we was paying them. So we never saw the bonus but it did mean our solicitors bill was £1,100(ish) lower than we originally thought.

    Hope this helps
    • Thrugelmir
    • By Thrugelmir 11th Oct 16, 4:36 PM
    • 51,336 Posts
    • 43,166 Thanks
    Thrugelmir
    Fair enough. I guess i join a large community of first time buyers frustrated by this.
    Originally posted by chamelious
    Frustration or impatience.
    “A man is rich who lives upon what he has. A man is poor who lives upon what is coming. A prudent man lives within his income, and saves against ‘a rainy day’.”
    • ticklemeellen
    • By ticklemeellen 11th Oct 16, 6:13 PM
    • 2 Posts
    • 0 Thanks
    ticklemeellen
    Hi, just thought I would put some advice in. Myself and my partner have been paying into a help to buy ISA with Halifax which is only in his name as I have a flat already. We went to a Bank of Scotland branch today to ask to close ISA account and move funds to his bank account. We clearly stated we needed the closure document as this was needed by our solicitor to claim the bonus. The cashier has subsequently transferred our savings and then closed the account with a final balance of £65 for the interest. We didn't realise until we got home that this was incorrect, went back to the bank who said that as the account was closed they wouldnt be able to help us and we might have more success coming back tomorrow! In fact the manager in branch seemed to feel this was our fault for not knowing how the account should be closed!

    So! As it stands we have lost out on the bonus we would have been receiving post completion. My partner has phoned Halifax who say they can't understand why they would have done this and they would have to raise a complaint. So my advice is if you are looking to close and get the summary for your account be extra vigilent as perhaps branch staff don't fully understand the process for closing the account and releasing funds.
    • neo2020
    • By neo2020 11th Oct 16, 7:31 PM
    • 46 Posts
    • 19 Thanks
    neo2020
    We are in the process of making a purchase and my understanding is that the best thing to do is to get your solicitor to negotiate a smaller exchange deposit.

    In our case, 10% would be 20,000, and the government bonus on 2 HTB ISAs with 3,200 each will be £1600, in other words we're asking to reduce the exchange deposit from 20,000 to 18,400 - not a huge ask.
    • moo313
    • By moo313 12th Oct 16, 12:53 AM
    • 40 Posts
    • 3 Thanks
    moo313
    We are in the process of making a purchase and my understanding is that the best thing to do is to get your solicitor to negotiate a smaller exchange deposit.

    In our case, 10% would be 20,000, and the government bonus on 2 HTB ISAs with 3,200 each will be £1600, in other words we're asking to reduce the exchange deposit from 20,000 to 18,400 - not a huge ask.
    Originally posted by neo2020
    Thats what I exactly did. I was asked to stump up for a 10% deposit at exchange. Which was £6k (I am going down the shared ownership route).

    As the MSE article on the HTB ISA clearly stated. I explained to my solicitor that I didn't realise that the bonus was paid out at completion. So I requested that is there any way of paying £4k instead and I'll pay the remainder at completion. (which is £1600 plus the £400 bonus) The my solicitor contacted the sellers solicitor and they agreed to accept the lower amount.

    As long you are open and honest about the HTB ISA with your solicitor and tell them at a early stage you are reliant on the bonus make up for the shortfall in the deposit. I doubt a seller will put out of a sale because of it.
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