MSE News: Budget 2015: Help to Buy ISAs to launch

southoftheriver

Where I live you can't buy much for £250,000. And no I'm not in London. Great for those outside the South East.

Hoping_for_Herts

Does anyone know if there's any flexibility between the 250K and 450k for London as those of us just outside London there's not much under 250...

agarnett

Q. Can my partner get one too?

A. Each first-time buyer can only open one Help to Buy ISA, meaning you can't open one this tax year and then another in the next tax year. But as it's one per person, if you're a couple you can both have one and get double the boost.

Two vouchers against one mortgage ? Really?? And what then? The lender loans it back to you as a £6,000 additional loan guaranteed by the government, but charges normal interest, or refunds it to you (both?) as instant cashback ? Or takes it as early repayment of part of your loan?Which is it?

LittleMissSaver_85

I think I know the answer already, but I just want to double check...

Back in January 2007 I had a mortgage on a shared ownership property. In July 2012 I sold the my property and settled the mortgage when I moved in with a boyfriend. Things didn't work out and I have since started saving again for a deposit to buy a house/flat outright and not through the S.O. scheme. 'Some' mortgage lenders classify you as a 'new buyer' if you haven't had a mortgage for 3 years and that will be the case for me in July 2015...

This scheme is great and I'd like to get involved, however I'm probably clutching at straws, but I thought I'd put it to the forum anyhow. Thanks!

agarnett

LittleMiss
Yes unfortunately you cannot satisfy the never owned a property before question, can you? But where are you getting that haven't had a mortgage for three years alternative qualification? I can see it on Nationwide's "Save To Buy ISA" rules which seems to be an existing product of theirs which is in danger of getting horribly confused with this latest government wheeze, but I've not yet found it anywhere else other than your post and in DRic40's post#2 in this thread?? Apart from Nationwide, I think the only other lenders using that "not owned for three years" definition are in America ?



Anyway, have just been playing with the numbers in a spreadsheet in case I ought to be leading my kids towards this (or not).

If I have my numbers right, then you can think of the Chancellor's new HelpToBuyISA a bit like one of those gimmicky 1 year Regular Saver accounts which are capped at £200 or £250 or £300 pm or whatever and come with a headline interest rate that gets everyone excited until they realise that the amount you get back out is no great shakes compared to what you have been putting in.

[STRIKE]However, with this new HelpToBuyISA, as long as the voucher you get at the end is effectively cashback as a reward for managing to buy your first home, then I guess it shouldn't be sniffed at.

I reckon that if you truly can get £15K back from 48 regular saved £200 amounts over the maximum 4 years, then you can consider this account as a special 23% APR Regular Saver!

Given that the highest regular savers offered by banks (which strictly up until the budget yesterday were subject to deduction of tax have been around 6%APR in recent years, 23% wouldn't be too shabby - although to luck out like that, you do first need to actually manage to buy your first home at the end of it!

Anyone arrived at the same conclusion ?[/STRIKE]

jmilli2

People will bash anything. I for one think it is brilliant and will help me save my deposit faster. In four years time when I've got a couple of grand for nothing instead of the £70 interest I might have earned in that time I for one will be very happy.

Semple

agarnett wrote: »

If I have my numbers right, then you can think of the Chancellor's new HelpToBuyISA a bit like one of those gimmicky 1 year Regular Saver accounts which are capped at £200 or £250 or £300 pm or whatever and come with a headline interest rate that gets everyone excited until they realise that the amount you get back out is no great shakes compared to what you have been putting in.

Although it is a lot better, a top rate regular saver @6% with 250 max monthly deposits will net you about £75-£80 interest over the year. The HTB ISA over a year (Assuming you open with £1,000 and top up with £200 monthly deposits) will give you £3,400 before any interest is applied, and excluding the £600 the government will give to the mortgage lender *on your behalf*.

What is interesting, as pointed out in the beginning of the thread. £1,000 opening balance and 48 additional deposits of £200, only equates to £10,600, plus £2,400 (48 deposits of £50) and £250 from the initial £1,000 deposit. Gives a grand total of £13,250 (excluding any interest earned). So not sure how it'll be possible to reach the £3,000 maximum limit.

dave2

hotnuts21 wrote: »

ALSO does this count towards your ISA allowance, are you allowed to open one of these alongside a normal isa? Im planning on getting a new ISA in April, which may mean I cant get one of these in the Autumn unless I hold off!

According to the MSE article linked in top post, you can only open this OR an ISA in each tax year.

This means you can only save £2,400pa (plus £1k initially) and not the usual £15k in an ISA.

However if you are putting all your new savings down as a house deposit, you're not losing. Even allowing for the autumn start, the return on this is far higher than any ISA even if you put the full amount in on the first day. In addition to this, the first £1,000 of interest income is now tax free, so that tax you wouldn't have been paying on the ISA interest will not be getting paid on the regular bank interest anyway.

Far as I can see you can only lose out if you win the lottery and can buy your house in new cash. Even in that scenario you'll probably not rue the reduced ISA allowances. Assuming of course that you do buy the home...

What bugs me is that this is all a bit messy. They could have just integrated it with existing ISA system so 2015/16 ISAs just have a tick-box where you say you're eligible for FTB. Or just make it additional - the tax saved on one of these is going to be tiny so why bother with this faff.

And why is a product that eliminates your regular ISA entitlement being announced just two weeks before the new ISA year and not becoming available for 6 months?

hardnutman

Any info on transferring in yet?

amiehall

Is it definite that you'll be banned from having this together with a standard cash ISA? Or is the article just assumptions? Seems a bit ridiculous to just casually mention that 2 weeks before the new tax year. I'll be buying a home in 2-3 years so this would be a great home for some of my savings in the meantime but I currently pay about £1000 a month into a regular saver ISA, need to make a swift decision about whether to stop or continue.