Help to buy isa

PM

Official MSE Insert:

You may also find our fully researched Help to Buy ISA guide helpful.

Back to the original post...


The only help to buy ISA I have found so far is nationwide save to buy ISA - I assume same thing.
Has any other bank/building society actually launched one?

Anyone else here looking at opening one?

Wail

I believe Help to Buy ISAs won't launch until the Autumn (if at all)

jimjames

PM wrote: »

The only help to buy ISA I have found so far is nationwide save to buy ISA - I assume same thing.
Has any other bank/building society actually launched one?

Anyone else here looking at opening one?

They're not even available yet as the relevant legislation hasn't been passed, it's purely consultation at the moment.

So at the moment none have been launched.

bowlhead99

The Nationwide product has been going for a few years. It is nothing to do with the new scheme, it just pays a reasonable rate and has some decent features if you go on to apply for a Nationwide mortgage (access to a 5% mortgage, cashback on mortgage completion).

I opened the non-ISA version of it a few years back and put the minimum £50 a month into it, to keep my options open. In the end, I did get a mortgage with Nationwide but not a special save-to-buy one, as I had a lot more than the 5% deposit and they had a better product for my needs; I just closed the account and took my money back plus the small amount of interest that had accumulated.

If you're looking to buy within the next 3 years, no harm in opening the Nationwide Save To Buy account, ISA or non ISA version at a token £50 a month anyway (though the ISA version would stop you also contributing to someone else's cash ISA this year until you closed and transferred it). If you won't be ready to buy within three years then don't bother as they have a maximum length of time the account can run.

As a massive mortgage provider, Nationwide are bound to offer a Help to Buy ISA once the full rules are out, and maybe they'll revamp the existing Save to Buy accounts at that time.

MARTYM8`

Nationwide is one of those companies which allow you to split investments across several cash isas in a year.

So its possible they will allow you to have both an ordinary cash isa and a help to buy one in each year. But nothing is definite - and it depends on the rules the next government introduces. And of course the next government could withdraw the policy - which personally I regard as a shocking waste of taxpayers money when we are cutting police numbers, social care and benefits to the poorest and borrowing money to fund it.

But assuming the next government doesn't develop a conscience and you want both ISAs then NW is a good bet.

KGriff

The link below is a short 1 page Goverment Produced PDF document giving the basic terms and conditions of a help to buy ISA, for those seeking to get on the first rung of the property ladder.

They will launch in October 2015 and paying in the maximum £200 per month (with no initial deposit), will take exactly 5 years to complete a saving of £12,000. The government will then make available the maximum £3,000 to help buy a UK property.

The help to buy ISA's are available to be opened within the next 4 years (from October)... Unless the scheme gets extended by some future announcement.

The 25% interest is paid at the point when the individual buys their 'first' property in the UK. It applies to certain property values depending on where the property is located (inside the London area or elsewhere):

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/414027/FTB_factographic_final.pdf

KGriff

Following on from my last post, as the government are fully funding the 'help to buy, ISA scheme themselves, I wouldn't be surprised to see the mortgage providers add 'additional' interest, or better still, a 'strong' incentive to these first time buyers opening these ISA accounts.

Maybe such things as... if the investor holds the 'help to buy ISA' with a provider and subsequently goes onto take the mortgage with the same provider they could agree a 'low' 2 year fixed rate mortgage, at the point when the ISA is first opened... or am I the only one thinking ahead trying to get these 'young' people on the property ladder. This is just one example of an incentive, I am sure there are many more.

Come on all Banks and Building Societies and other such providers, win back the heart of the public. Help these people start their lives.

bowlhead99

A few building societies already have saving products (ISA or not) designed to help you save towards a mortgage with them. Nationwide have a "save to buy" for example with cash back, reasonable interest rate and access to 95% mortgages; they've had them a few years now.

You might think some banks would use the govt contributions as an excuse to pay low interest themselves on the new ISA product. However, reality is they will all compete for customers in the market once the scheme is available - so the ones with the best interest or perks or other good features will generally attract the most business, as it is today with other account types.

KGriff

bowlhead99 wrote: »

You might think some banks would use the govt contributions as an excuse to pay low interest themselves on the new ISA product. However, reality is they will all compete for customers in the market once the scheme is available - so the ones with the best interest or perks or other good features will generally attract the most business, as it is today with other account types.

I really hope so. I'm lucky, my mortgage days are over and my children are on the property ladder too, but I have many friends with great kids, who struggle to get their deposit.

The kids work hard, whilst trying to simply live a little and it is very much an uphill battle as they see the house price increases continuing to outstrip the rate at which they can save.

It was much easier in my day, even with mortgage interest rates at 15%.

The earnings ratio, to size of mortgages required, is quite beyond belief.

The boom in house prices coupled with shortage of supply and demand, from overseas and within, makes it difficult to put a foot on the first rung.

I hope the providers not only continue to provide support, but actually go the extra mile to help these people. The government help to buy ISA's are an opportunity for the banks etc. to step up to the mark too.

bowlhead99

The government giving you free money over a five year period during which you save up money to buy a house, givers you more money to offer for the house. That is not going to help house prices for first time buyers come down to lower multiples of salaries. It introduces more demand for housing at the FTB price point.

However, a maximum of a few thousand pounds over half a decade on an amount which may only be a fraction of someone's total deposit, is a lot less extravagant than the last scheme, in which they loaned 25% on top of what someone could raise for their entire deposit and mortgage and took a co-share in the house, to allow the FTB to buy a bigger and more expensive house than they could actually afford with their own money.

KGriff

bowlhead99 wrote: »

The government giving you free money over a five year period during which you save up money to buy a house, givers you more money to offer for the house. That is not going to help house prices for first time buyers come down to lower multiples of salaries. It introduces more demand for housing at the FTB price point.

However, a maximum of a few thousand pounds over half a decade on an amount which may only be a fraction of someone's total deposit, is a lot less extravagant than the last scheme, in which they loaned 25% on top of what someone could raise for their entire deposit and mortgage and took a co-share in the house, to allow the FTB to buy a bigger and more expensive house than they could actually afford with their own money.

I think it encourages people to save and it's not limited to one per property, so the help to buy offer is open to any person involved in buying the house. So for a couple that could be an additional £6000. Certainly better than if they were saving under normal circumstances.

I would like to have seen a higher minimum monthly payment (to help reduce the years) and also the financial institutions 'compliment' the scheme with their own incentives.

I think those wanting to own their own home, should be afforded these opportunities.

Housing supply and price inflation are issues that need addressing too for the next generation.