Help to Buy ISA guide

masonic

TrustyOven wrote: »

I thought people on this forum were saying it goes towards the total outstanding amount of the mortgage.

So if you need to accumulate 15000 depost before you can start proceedings, you would not be able to use your HTB bonus for this part, and after you exchange contract and get your keys and you are in your house and moving your stuff in, then the bonus gets applied to the total outstanding mortgage...

That's how I understood it from some other reply on the foum.

Is the above correct?

As I understand it, once you have completed, if you haven't already received the bonus, then you no longer qualify as a FTB and the application for the bonus will be refused. At least one poster has already been caught foul of this recently (edit: see post #1004 in this very thread), so it bears mentioning.

The bonus must be used at completion towards the cost of the property. It is added to the money you put towards the property (with the mortgage company putting up the rest). See https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/. That's what I mean when I say it goes towards the mortgage deposit.

It is not used as a mortgage repayment sometime later, if that's what you are implying.

Sophie508

Thanks for this, I guess my main concern is when they do the bonus. I read you can't use it at exchange just completion.

I would assume that on exchange ( when we have to pay our house/mortgage deposit- whatever you want to call it of £15001 ) we would pay the amount less the bonus (£1150) and our solicitor would then apply for the bonus and pay the bonus monies by completion? Meaning we would only pay £ 13850 on exchange ?

Thanks for any help guys! Seems everyone has the same question. I think terminology can sometimes stand in the way too! Our solicitor has never done one before so he is trying to understand it all too

Soph

masonic

Sophie508 wrote: »

I would assume that on exchange ( when we have to pay our house/mortgage deposit- whatever you want to call it of £15001 ) we would pay the amount less the bonus (£1150) and our solicitor would then apply for the bonus and pay the bonus monies by completion? Meaning we would only pay £ 13850 on exchange ?

The time between exchange and completion could be as little as a week or as long as a month. A few posts earlier in the thread, someone mentioned completing 6 working days after exchange.

Your solicitor will advise you on the deadline for them receiving any funds required for completion of the purchase. The latest they could possibly advise is the end of the working day before completion. You may not need to provide the deposit at the time of exchange. Your solicitor needs to apply for the bonus at least 5 working days before completion (assuming they have already registered on the online portal - something for you to check) to allow time for the funds to be received, so by that time you should already have your closure letter from your HTB ISA (so better to get that done before exchange).

Clearly if your solicitor applies for, and receives, the bonus well ahead of the planned completion date, there shouldn't be an issue with just paying the remainder of the funds needed for the purchase. If the funds are applied for at the last minute, and the solicitor thinks there will be a risk of this money not being received in time, they might well advise you to transfer enough money to cover this eventuality. I'm not sure what would ultimately happen to the bonus in that situation, but it's probably best not to find out.

NotEvenScouse

Hi all,

I've read through the guide, and although it does make total sense, I've just got one question.

Can I set up, and pay into, a Help to Buy ISA even if I have no intention of buying a home for a long time? The interest rates of Help to Buy ISAs seem to be far superior to other ISAs. Can I therefore claim a great interest rate of the Help to Buy ISA - then withdraw my savings plus interest and then close it down? Appreciate I wouldn't then receive any state top up.

Thanks guys, :money:

eskbanker

NotEvenScouse wrote: »

Can I set up, and pay into, a Help to Buy ISA even if I have no intention of buying a home for a long time? The interest rates of Help to Buy ISAs seem to be far superior to other ISAs. Can I therefore claim a great interest rate of the Help to Buy ISA - then withdraw my savings plus interest and then close it down? Appreciate I wouldn't then receive any state top up.

Yes, you can do what you suggest, provided that you can honestly answer the declaration that you qualify as a first time buyer in order to open an HTB ISA.

However, if you're only comparing HTB ISAs with standard cash ISA rates, you're neglecting many other places to put savings for better returns, read through http://www.moneysavingexpert.com/savings/which-saving-account and https://forums.moneysavingexpert.com/discussion/5374614 for further ideas....

masonic

NotEvenScouse wrote: »

Can I set up, and pay into, a Help to Buy ISA even if I have no intention of buying a home for a long time? The interest rates of Help to Buy ISAs seem to be far superior to other ISAs. Can I therefore claim a great interest rate of the Help to Buy ISA - then withdraw my savings plus interest and then close it down? Appreciate I wouldn't then receive any state top up.

A better option would be to transfer it into a LISA in due course, but as eskbanker says, now that rates available to new customers have fallen from the highs of 4%, I don't think the HTB ISA is worth bothering with as a pure savings vehicle.

Ollie1990

Hi guys,

I paid in to a help to buy isa from December to May as I was waiting for my new build property to be ready. They gave me 2 weeks notice for completion so closed my ISA sent my solicitor the closing letter and asked them to apply for the bonus.

They didn't get it before completion and have said that's it. Is that it? Or can I still claim the bonus?

Thanks
Ollie

masonic

Ollie1990 wrote: »

I paid in to a help to buy isa from December to May as I was waiting for my new build property to be ready. They gave me 2 weeks notice for completion so closed my ISA sent my solicitor the closing letter and asked them to apply for the bonus.

They didn't get it before completion and have said that's it. Is that it? Or can I still claim the bonus?

How many working days before completion did your solicitor receive the closing letter and how many working days before completion did your solicitor apply for the bonus?

You won't be able to claim the bonus retrospectively, but you might have a compensation claim against the solicitor if they could reasonably have been expected to claim the bonus the required 5 working days prior to completion, but failed to do so.

Or are you saying the solicitor didn't receive the closing letter before completion? - in which case you are out of luck.

jackmack26

My wife and I are buying our first home under the help to buy equity loan scheme. We will be exchanging contract next month.

Two questions about HELP TO BUY: ISA

When should we be paying the 5% deposit? On exchange or completion?

Will our help to buy: ISA savings and bonus be a part of that deposit?

Many thanks

jackmack26

CMACVEAN wrote: »

I am confused by the following paragraph on the Help to Buy ISA guidance:


'However, you can only use the bonus for your mortgage deposit, not your home deposit. What this means in practice is that the Government bonus can't be used toward the deposit you pay to the seller when you exchange contracts, it can only be used at completion'

I am buying with the equity loan of 40%, so I only have a 5% deposit (the flat is £335,000, so my deposit is of course £16,750 and the equity loan is £134,000). I mistakenly thought the Help to Buy ISA funds could be used towards the 5% deposit (which I assume is the deposit payable on exchange of contracts). It seems now the ISA funds can only be used at completion. My mortgage offer is for 55% of the purchase price (i.e. £184,250). So if my ISA funds get paid to my lender on completion then do those funds serve to immediately reduce the amount I've borrowed? Should I have told the lender I have the ISA before it issued it's mortgage offer? Clearly my 5% deposit, 40% equity loan and 55% mortgage make up the full purchase price, so I don't understand what is meant by a 'mortgage deposit', as there is no shortfall I need to make up?


Any help with this would be greatly appreciated, as I can't seem to get my head around it!!

I'm facing a same situation here.

Any resolution on this?