Help to Buy ISA guide

Siannie

We were duped by the misunderstanding that we could use the HTB ISA bonus towards our deposit...

Even before we were able to open the HTB ISAs I was asking questions about the payments, the bonus, and how exactly it worked...no one was able to confidently tell me a simple answer...infact, the month before the HTB ISAs began, I had a meeting in a bank, and asked questions...it turned out I already knew more than the staff in the branch. (OBVIOUSLY this filled me with confidence)

We both opened ISAs at our earliest opportunity, me when they first began, and have been putting the maximum monthly amount into them - we have nearly £6k in our ISAs and some money in savings outside of the ISA accounts.

We are buying a new build property - hoping that we would be able to afford a few fancy luxury upgrades to the house using some of the money not in the ISAs.

Once we put our reservation on our property, we learned the truth about the bonus...we were gobsmacked and it resulted in a number of emails, phone calls and face to face meetings with our financial advisor, sales team and solicitors.

Eventually, we learned that there are loopholes - you don't need to actually hand over any money at the point of exchange, but because you sign the contract, if you bail out of the purchase, you'll basically be dragged through court for the money owed, anyway. So you are committing to paying the deposit, and buying the property anyway.

At the end of our meetings/phone calls/emails we were able to agree to pay a minimal amount on exchange (keeping sweet the developers) from our savings, holding the HTB ISAs open until later on in the process (increasing our bonus, as we can keep putting money in each month) and pay the remainder of the deposit, using the bonus, at, or just before, completion. (We do believe that buying from a larger developer has helped our situation, as they are able to offer greater flexibility - but regardless who you are buying from...can it hurt to ask the question??)

It also means we can afford some of our little luxuries, that will make our house a home! :j

masonic

LizzieC87 wrote: »

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?

Yes, this is allowed.

masonic

Siannie wrote: »

Once we put our reservation on our property, we learned the truth about the bonus...we were gobsmacked and it resulted in a number of emails, phone calls and face to face meetings with our financial advisor, sales team and solicitors.

Eventually, we learned that there are loopholes - you don't need to actually hand over any money at the point of exchange, but because you sign the contract, if you bail out of the purchase, you'll basically be dragged through court for the money owed, anyway. So you are committing to paying the deposit, and buying the property anyway.

At the end of our meetings/phone calls/emails we were able to agree to pay a minimal amount on exchange (keeping sweet the developers) from our savings, holding the HTB ISAs open until later on in the process (increasing our bonus, as we can keep putting money in each month) and pay the remainder of the deposit, using the bonus, at, or just before, completion. (We do believe that buying from a larger developer has helped our situation, as they are able to offer greater flexibility - but regardless who you are buying from...can it hurt to ask the question??)

It also means we can afford some of our little luxuries, that will make our house a home! :j

Yes, when you exchange contracts you are entering a legally binding agreement and can be sued if you don't go ahead with the purchase. The HTB ISA is used for the mortgage deposit, which is payable at completion and combined with the mortgage funds. This is explained on the official website, but bank staff are rarely the best people to ask about ISA rules in general, let alone a more complex scheme like this one. The HTB ISA bonus money would have no value to the developers as an exchange deposit, since if you pulled out of the purchase it would be clawed back by the Government and they would never receive it.

One option is to negotiate on the exchange deposit as you did, pay it out of money you'll be spending on the property after purchase and ask to be refunded the exchange deposit at completion instead of having it added on to the money used for the purchase. Another is to exchange and complete on the same day.

GrahamJeffs

Our 26 year old (YES...26 year old!:eek:) son is a rubbish saver but has now turned to us to ask us to help him. He has previously done this but it didn't work so now he's a bit older...fingers crossed.

The question is: are we able to open a Help to Buy ISA in our names which he can then pay into but not get access to? If he has access he will dip in and spend it on magic beans! :doh:

ta

Graham

eskbanker

GrahamJeffs wrote: »

The question is: are we able to open a Help to Buy ISA in our names which he can then pay into but not get access to?

Only if you can declare that you don't own (and haven't owned) any interest in a property and ultimately end up buying a property in your name(s) with the money.

GrahamJeffs

Hmmm..we do own our own property though!

Perhaps he can set one up and we can control the password and access etc to it?

Graham

eskbanker

GrahamJeffs wrote: »

Our 26 year old (YES...26 year old!:eek:) son is a rubbish saver but has now turned to us to ask us to help him.

To be honest I'd have thought that the best way to help him would be to offer advice and support rather than taking responsibility away from him by physically looking after his money for him, unless there are some serious addiction/disability/medical issues at play here - no offence intended but at 26 he should be mature enough to stand on his own two feet.

It sounds like he's some way off being ready to get on the housing ladder anyway, is there anything in particular he's wanting to save for?

GrahamJeffs

eskbanker wrote: »

To be honest I'd have thought that the best way to help him would be to offer advice and support rather than taking responsibility away from him by physically looking after his money for him, unless there are some serious addiction/disability/medical issues at play here - no offence intended but at 26 he should be mature enough to stand on his own two feet.

It sounds like he's some way off being ready to get on the housing ladder anyway, is there anything in particular he's wanting to save for?

Been there and done that many times tbh so this is the last throw of the dice. I totally agree with everything you say but he is a total numpty and a real PITA.

Its a long story which I wouldn't share on open forum but he doesn't listen to anyone; comes up with hare brained schemes; has an excuse for everything and believes what he says!

I teach Business Studies and am also qualified to teach basic real world finance (not accounts etc) to students of 11 - 19 so we don't come at this from ignorance, trust me.:)

The key with him is just to get him saving because if he has it available he just pees it up against a wall and has zero to show for it!

ta

Graham

eskbanker

GrahamJeffs wrote: »

The key with him is just to get him saving because if he has it available he just pees it up against a wall and has zero to show for it!

But what's the problem with that?

Sorry, that probably sounds unduly flippant but what I'm meaning is what's the consequence of him not saving? The reason I asked before was to ascertain objectives, i.e. if he wants something enough then he should find a way, but if there's no real motivation to save then it's always going to be an uphill battle....

Anyway, given your day job you won't need me to tell you basic stuff like that - going back to your original question then you could open any sort of account in your name(s) and look after money for him, except that an HTB ISA is unlikely to be viable, start at http://www.moneysavingexpert.com/savings/which-saving-account

GrahamJeffs

He wants to save but cannot do it. We are fed up with him moaning about it and doing nothing.

I think I'll get him to open an on line one and use our email address and we will set the password so he cant access it. We'll also do something similar with an high interest account for any extra he can save above the £220pm limit

Graham