Help to Buy ISA guide

MQA

Depends on your risk profile/volatility rating. Also the period would include the credit crunch/global recession (a lot of data sites no longer show that period of decline in their figures now).

masonic

MARTYM8` wrote: »

I agree the bureaucrats will tick the boxes.

But what checks will be done as to whether the applicant once owned all or part of a property abroad – as could apply for EU nationals who are eligible. That requires a bit more effort – and assumes the land registry databases in say the former Communist states are 100% accurate.

If you owned a property in the UK you might get caught – in Romania or Slovakia less certain.

Agreed. The restriction on property ownership abroad always looked like a difficult one to police.

So far the only people who have reported being caught out are those playing by the rules but whose solicitor left it too late.

laineybabes

I already save the maximum per month in old HTB Isa and have had it since the launch. I will also get the new LISA when it launches next year and will be able to save the maximum of £4k each year for the time being. I intend to use the new LISA for a house in future. My question is, can I continue to hold BOTH Isas at the same time and save the maximum each year in both and gain the interest on both or do I have to close the old HTB one and transfer the funds to the LISA on 31 March 2017?
Also as a second query, if I manage to save the maximum of £32 K in the new LISA over the shortest time possible ie 8 years would I be able to just let the account sit and gain the interest until I am ready to use it and/or would I be able to transfer the full amount to a new LISA if one became available with a better interest rate and continue to save my ISA allowance each year to gain more interest? Thanks for any replies

masonic

laineybabes wrote: »

I already save the maximum per month in old HTB Isa and have had it since the launch. I will also get the new LISA when it launches next year and will be able to save the maximum of £4k each year for the time being. I intend to use the new LISA for a house in future. My question is, can I continue to hold BOTH Isas at the same time and save the maximum each year in both and gain the interest on both or do I have to close the old HTB one and transfer the funds to the LISA on 31 March 2017?

You can pay into both up to their individual limits, but if you use the LISA to purchase a home, you will not be able to get the bonus on the HTB ISA.

Also as a second query, if I manage to save the maximum of £32 K in the new LISA over the shortest time possible ie 8 years would I be able to just let the account sit and gain the interest until I am ready to use it and/or would I be able to transfer the full amount to a new LISA if one became available with a better interest rate and continue to save my ISA allowance each year to gain more interest? Thanks for any replies

If you are expecting to hold the money for >8 years, then you may wish to think in terms of investment returns rather than savings interest. From my understanding, the LISA will be a long term investment product primarily, so the likelihood of getting much interest on cash is low.

There is no reason to think a LISA will work differently than other ISAs with respect to transfers.

Madglover

The HTB "con" as the papers title it have actually left me a tad concerned.

I'm planning to buy a house in the next 18 months with my girlfriend we both have some savings but are also paying £200 per month each into our HTB accounts

I opened mine earlier so I have £2,600 in mine and she has £2,000. If we wait another year we'd have £5,000 and £4,400

So £9.400 and thus £11,750 with the bonus if we buy a house for around £180,000 with a 10% deposit. £18,000 using money from other accounts.
So even if as Martin suggests the bonus is only for the payment stage we can't withdraw our help to buy cash as we'd lose our bonus.

So finding the house deposit becomes almost impossible right?

NoahWisdom

I live in an expensive area (outside London) where it is difficult to even buy a one-bed flat under £250k. However, is it possible to use the bonus on the 50% share of a shared ownership property?

For example, If I wanted to buy a property with a market value of £300,000 but was only purchasing a 50% share (£150,000) under shared ownership, can the bonus apply to that share? I have been through the Help to Buy: ISA Bonus ‘Scheme Rules’ and it only refers to ‘Purchase Price’ not a ‘market value’. The latter is not mentioned in the ‘Scheme Rules’.

For instance, in the definitions it states:

(iv) the Purchase Price is:
(A) in the case of a property located in London, not more than £450,000; or
(B) in the case of a property located outside London, not more than £250,000;

And

“Purchase Price” means:
(a) in connection with the acquisition of any interest in land other than under the terms of a Regulated Home Purchase Plan, the value of the consideration required to be paid, and which is paid, by the purchaser under the sale and purchase agreement entered into in connection with the acquisition of that interest in land (excluding, for the avoidance of doubt, any consideration attributed to the purchase of any fixtures and/or fittings); and
(b) in connection with the acquisition of any interest in land under the terms of a Regulated Home Purchase Plan, the value of the consideration required to be paid, and which is paid, to the original seller for the legal interest in that land (excluding, for the avoidance of doubt, any consideration attributed to the purchase of any fixtures and/or fittings).

Furthermore, at section 7.5 (ii) it states:

the Eligible Conveyancer is satisfied that:
(a) the Help to Buy: ISA Holder will be purchasing, whether solely or jointly, an Eligible Interest in Land;
(b) the purchase of that Eligible Interest in Land will be funded by a loan, which will be secured by a legal mortgage against that interest in land;
(c) unless paragraph (B) below applies, such legal mortgage is not a Buy to Let Mortgage; and
(d) the Purchase Price for the Eligible Interest in Land is:
(1) if the Eligible Interest in Land is situated in London, not more than £450,000; or
(2) if the Eligible Interest in Land is situated outside London, not more than £250,000.

The Eligible Interest in Land is defined as:

“Eligible Interest in Land” means a legal interest in land, solely or jointly owned, and situated within the United Kingdom, as described in paragraphs (a) and (b) of the definition of Residential Property Owner.

My interpretation is that it can be used on the shared ownership share as the “Eligible Interest in Land” is only 50% and the “Purchase Price” is therefore less than £250,000. This is spelt out in definition of “Purchase Price” above:

As the 'amount to be paid' is only £150k so can the bonus be claimed? My conveyancer quotes the Help to Buy agent who claims it is 'market value' but this term does not appear in the scheme rules. I have contacted Help to Buy and they are none the wiser. They told me contact the HCA - who have told me to look at the Halifax website. Low and behold, none the wiser.

Please help as everyone connected with this ill-thought out policy is utterly confused.

Strummer22

laineybabes wrote: »

Also as a second query, if I manage to save the maximum of £32 K in the new LISA over the shortest time possible ie 8 years would I be able to just let the account sit and gain the interest until I am ready to use it and/or would I be able to transfer the full amount to a new LISA if one became available with a better interest rate and continue to save my ISA allowance each year to gain more interest? Thanks for any replies

£32K is not the maximum you can save in a LISA - it's the maximum bonus you could get by contributing £4000 every year between the ages of 18 and 50.

masonic

NoahWisdom wrote: »

I live in an expensive area (outside London) where it is difficult to even buy a one-bed flat under £250k. However, is it possible to use the bonus on the 50% share of a shared ownership property?

For example, If I wanted to buy a property with a market value of £300,000 but was only purchasing a 50% share (£150,000) under shared ownership, can the bonus apply to that share? I have been through the Help to Buy: ISA Bonus ‘Scheme Rules’ and it only refers to ‘Purchase Price’ not a ‘market value’. The latter is not mentioned in the ‘Scheme Rules’.

You can use the bonus on a shared ownership property, but the value of the property must be below the upper limit. You can't just halve the value of the property because you are only buying a 50% share. If you are willing to wait until you can use a LISA to contribute towards a house purchase, then the limit will be £450k UK wide as things currently stand.

You've probably pasted the relevant statement from the scheme rules:
“Eligible Interest in Land” means a legal interest in land, solely or jointly owned...
So the legal interest encompasses all joint owners, not just your share. In other words, the price of shares belonging to all parties with the legal interest the land must be added up. In practice, this will mean a pro-rata scaling of the price paid for the share that was most recently sold.

laineybabes

Thanks for all the info on Lisas. If the interest rate remains decent then it may be a way to save fir a home. I know long term investment is best for better rates. Thanks again.

LizzieC87

Please help...

I opened a cash isa last tax year (December 2015), and have now decided on a 'help to buy isa'.

I opened a 'help to buy isa' yesterday, on the understanding that I am allowed to open one as it's not the same tax year as I opened the cash isa.

Now I don't know what to do... can I keep my funds in my old cash isa earning a tiny amount of interest, but not added to it, while I withdraw some each month to add to the new 'help to buy isa'? Is this allowed?

Any help would be very much appreciated. I am confused.