Help to Buy ISA guide

Nguyen60

I am in the process of buying a flat for £280k and have a help to buy ISA with Barclays. On contract exchange I provided the closing statement for my ISA to the solicitor with balance of £2423.

When my solicitor came to trying to draw down my 25% bonus on my closing statement, the ISA bonus agency did not recognise the address that I had purchased and therefore refused to pay my rightful bonus (which I clearly qualify for).

I find this to be totally ludicrous as the reason behind this is clearly the agencies out of date geographical system / data. My solicitor is working to resolve this and bless them, they are not very tech savvy so if they input the address into the ISA Agency database and the system rejects the address then the solicitor goes in to "the computer says no mode". Bearing in mind the building is 8 years old and clearly the post office, utilities, the lender, everyone (but the government) recognises the address.

Has anyone else had this issue? If so how do you resolve? I am not just going to walk away!

Goldmember

My 17yr old son turns 18 next month and has nearly 7k in a Junior ISA, primarily for a deposit for a house when he needs it. He is also starting an apprenticeship in September and I am hoping he is going to be saving £50 a wk minimum for at least the 2yr duration of his apprenticeship.
Is a help to buy ISA the right way to go? Which one would be better for these circumstances? And would it be better if we close down his Junior ISA?
Not much idea on ISA's as you can probably guess.
It seems a bit if a minefield with so many different products on offer.
Thanks in advance for any advice :beer:

PollyWolly

I'm looking to start this this week. Going by recommendations in here I'm looking at Barclays who offer 2.27%. I'm wondering how is the interest worked with this.
£1200 to start for first month.
200 x next 11 month = £2200
£3400 After the first 12 month
£5800 after 24 month
£8200 after 36 month
£10,600 after 48 month etc etc.

Does it mean that if the rate stays the same and I pay the full £200 each month, then instead of my £10600 I would actually have an extra £500 or so on top? (I don't know how interest works on this)
Does this mean then that the 25% added at the end, is that 25% of £10600 (£2650) so £13250, or, if it was an extra £500, would it then be £10600+£500=£11100 +25% (£2775) = £13875.

eskbanker

PollyWolly wrote: »

I'm looking to start this this week. Going by recommendations in here I'm looking at Barclays who offer 2.27%. I'm wondering how is the interest worked with this.
£1200 to start for first month.
200 x next 11 month = £2200
£3400 After the first 12 month
£5800 after 24 month
£8200 after 36 month
£10,600 after 48 month etc etc.

Does it mean that if the rate stays the same and I pay the full £200 each month, then instead of my £10600 I would actually have an extra £500 or so on top? (I don't know how interest works on this)
Does this mean then that the 25% added at the end, is that 25% of £10600 (£2650) so £13250, or, if it was an extra £500, would it then be £10600+£500=£11100 +25% (£2775) = £13875.

The bonus is payable on the interest-inclusive total, as per https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#5e9a24ea-e1f7-648f-8ce9-ff0000ad17aa:

Will my interest on my savings count towards my government bonus?
Yes. Your government bonus will be calculated based on the amount of money you have in your account when you close it. This includes both the money you have saved, and any interest you have earned on that money. The maximum government bonus is £3,000.

Goldmember

Hi, can anybody give me a snippet of advice on my above post please??

Thankyou

eskbanker

Goldmember wrote: »

My 17yr old son turns 18 next month and has nearly 7k in a Junior ISA, primarily for a deposit for a house when he needs it. He is also starting an apprenticeship in September and I am hoping he is going to be saving £50 a wk minimum for at least the 2yr duration of his apprenticeship.
Is a help to buy ISA the right way to go? Which one would be better for these circumstances? And would it be better if we close down his Junior ISA?

For contributions going forward he has the choice between a Help to Buy ISA or a Lifetime ISA - the latter is the newer product and is generally a better bet than HTB, provided he's not buying a property within the next year.

http://www.moneysavingexpert.com/savings/lifetime-ISAs includes a table comparing them, as well as info about providers, although as of now there is only one who supports cash saving rather than investment, namely Skipton BS. Their interest rate of 0.5% is poor, but this is trumped by the 25% government bonus (also payable with a HTB ISA).

http://www.moneysavingexpert.com/savings/which-saving-account is a more general article about what to do with the £7K in the junior ISA, which will convert to a standard cash ISA on his birthday.

Personally I'd open one or more regular saver accounts for the monthly contributions and fill up the LISA to the £4K annual allowance, feeding from these and the junior ISA proceeds.

Goldmember

Thanks for your reply.

I see that you can put £1200 in the HTB in the 1st month.

Is there a limit to the lump sums you can put into a LISA?

Could he transfer his Junior ISA when he is 18 to another ISA and not put any contributions into it aswell as have a HTB/LISA, or can he not have another ISA aswell as the HTB/LISA?

I don't think using his ISA money to open new bank accounts with a good interest rate is a good idea in his case, as hes not the best with saving/handling money, just yet! so maybe transferring it to another ISA might be better for him.

Cheers

eskbanker

Goldmember wrote: »

Is there a limit to the lump sums you can put into a LISA?

The LISA limit is an annual one (£4K) unlike the HTB's monthly cap, so all £4K could be paid in in one transaction should he wish to do so.

Goldmember wrote: »

Could he transfer his Junior ISA when he is 18 to another ISA and not put any contributions into it aswell as have a HTB/LISA, or can he not have another ISA aswell as the HTB/LISA?

He can have multiple ISAs, the rule is that you can only pay new money into one of each type in any given tax year, LISA being a different type from Cash/HTB.

Goldmember wrote: »

I don't think using his ISA money to open new bank accounts with a good interest rate is a good idea in his case, as hes not the best with saving/handling money, just yet! so maybe transferring it to another ISA might be better for him.

As long as you bear in mind that at 18 it's his money to decide what to do with....

SarahLouiseHogg

Hi,

I wondered if you could offer any advice on using the help to buy ISA for a new build mortgage? My brother is building his first home and everyone is telling him 'they don't think you can use the help to buy ISA for a self build' which is frustrating as I don't think this is the case. Any pointers on where to find helpful info or which lenders offer it would be great? Thanks xx

eskbanker

SarahLouiseHogg wrote: »

Hi,

I wondered if you could offer any advice on using the help to buy ISA for a new build mortgage? My brother is building his first home and everyone is telling him 'they don't think you can use the help to buy ISA for a self build' which is frustrating as I don't think this is the case. Any pointers on where to find helpful info or which lenders offer it would be great? Thanks xx

The HTB ISA bonus can be used for the acquisition of the land but not the construction phase, as per https://www.helptobuy.gov.uk/help-to-buy-isa/faq/:

Can I use a Help to Buy: ISA bonus to buy land to build my first property on?
Assuming that you meet all the other eligibility criteria, you will be able to use the government bonus towards the purchase of the land for a self-build property which is the only home you will own, be where you intend to live and be purchased with a mortgage. The land must be in the UK, have a price of £250,000 or less (with a higher price limit of £450,000 in London).

Can I use the Help to Buy: ISA bonus to fund the construction of a home on land I own?
No. You cannot use a government bonus to fund the construction of a home on land you already own.