Help to Buy ISA guide

margaretx9

masonic wrote: »

Let's think about this logically: Someone who has saved up and bought their own property or a share in a property is not entitled to Government assistance with future purchases. Would someone who has been gifted a share in a property be more or less entitled to Government assistance to buy another property? :think:

Say you inherited a £10k house in Bulgaria from your Bulgarian aunt a few years ago. You sold it because you didn't live in Bulgaria and pocketed the £10k in cash. You are ineligible for the help to buy isa if you wanted to buy a house now to live in - even it was a £30k flat in Stoke and you only earn £10k a year.

But say someone inherits £50k in cash and earns £100k and then buys a flat in London for £449,0000 (£49k deposit/4 times salary mortgage).

You could equally argue why should someone who earns £100k/inherited £50k in cash gets government help to buy a home but not someone earning £10k who inherited £10k via selling a house abroad they inherited but never lived in?!

I accept its the rules - but you could equally argue why is the latter more deserving of a government handout to buy a property when they received a far bigger inheritance and earns 10 times as much and is buying a property costing 15 times as much? So lets not suggest the HTB isa is about fairness!

masonic

margaretx9 wrote: »

Say you inherited a £10k house in Bulgaria from your Bulgarian aunt a few years ago. You sold it because you didn't live in Bulgaria and pocketed the £10k in cash. You are ineligible for the help to buy isa if you wanted to buy a house now to live in - even it was a £30k flat in Stoke and you only earn £10k a year.

But say someone inherits £50k in cash and earns £100k and then buys a flat in London for £449,0000 (£49k deposit/4 times salary mortgage).

You could equally argue why should someone who earns £100k/inherited £50k in cash gets government help to buy a home but not someone earning £10k who inherited £10k via selling a house abroad they inherited but never lived in?!

I accept its the rules - but you could equally argue why is the latter more deserving of a government handout to buy a property when they received a far bigger inheritance and earns 10 times as much and is buying a property costing 15 times as much? So lets not suggest the HTB isa is about fairness!

Nobody else has mentioned fairness. I mentioned entitlement. Entitlement is the measure of to what degree someone would have a right to something, whereas fairness is a subjective assessment of whether that entitlement is morally right. Your mistake seems to have been to confuse the two. Incidentally, the answer to my question posed above is not 'more' or 'less', it is 'no'.

In reference to 'fairness', the Government can't arrange a personal hearing for each house buyer to explore all of their personal circumstances in order to decide if they really need help to buy. So they have come up with some simple eligibility rules, which work in some cases but not others. They have worked in the case of the previous poster.

Someone who is extremely wealthy and inherits will likely not benefit from the scheme because it would be cheaper for them to buy before they've saved enough into the scheme (e.g. immediately in your example), and/or they may be in a position to buy without a mortgage. If they were saving anyway and didn't have the means to buy without their inheritance, then it could be considered unfair to deprive them of benefits accrued prior to their change in circumstances. Arguably, incentivising someone who is a high earner and therefore pays quite a lot of tax to settle down in central London with a few k HTB bonus where they will continue to pay taxes at a higher rate than they would if they moved and worked in a cheaper part of the UK will result in a good outcome for the Treasury overall. Nobody can claim to know what was in the minds of those who formulated the rules.

StaceyFTB

Hey hope you can help as my solicitor seems so ignore or answer my questions with more questions.
Myself and my partner have a HTB isa equaling 11400 we are buying a property for 115000. We believe (if she would give me a straight answer) that my solicitor has negotiated a smaller exchange deposit (we haven’t exchanged yet. But have a agreed a completeion date with the sellers all being well)
As we have explicitly said we want the bonus to cover the full 10% as we are relying on using extra money we have saved for fees, furniture etc.
But having closed our HTBs it states bonus is to be claimed on the total closing amount. Which is more that we need. As we will but only putting around a 7.6% deposit down at exchange. Then on completion the rest comes in bonus form.
We do not want a slightly smaller mortgage as this does help us right now. We have a very competitive 5yr fix that we are very happy with.
Our solicitor has said any excess funds will be returned to us on completion.
So am I right I’m thinking she will want the full 11400? Or 75% of this. ( I have asked but no reply as of yet. We are definitely regretting using them)

Hope some of this makes sense. We are still confused ourselves.
But if anyone has been through having more money than they needed in their HTB or anything similar. I’d be so greatfull for any insight.

TIA

masonic

StaceyFTB wrote: »

Myself and my partner have a HTB isa equaling 11400 we are buying a property for 115000. We believe (if she would give me a straight answer) that my solicitor has negotiated a smaller exchange deposit (we haven’t exchanged yet. But have a agreed a completeion date with the sellers all being well)
As we have explicitly said we want the bonus to cover the full 10% as we are relying on using extra money we have saved for fees, furniture etc.
But having closed our HTBs it states bonus is to be claimed on the total closing amount. Which is more that we need. As we will but only putting around a 7.6% deposit down at exchange. Then on completion the rest comes in bonus form.
We do not want a slightly smaller mortgage as this does help us right now. We have a very competitive 5yr fix that we are very happy with.
Our solicitor has said any excess funds will be returned to us on completion.
So am I right I’m thinking she will want the full 11400? Or 75% of this. ( I have asked but no reply as of yet. We are definitely regretting using them)

You need to get her to clarify how much she needs from you at exchange. This cannot include the HTB ISA bonus. If it is a 7.6% deposit, and the mortgage deposit is 10%, then there will be a shortfall at completion that will need to come out of your own funds. If more than 7.6%, then you may be in a position where you have more funds than needed at completion - if the solicitor has told you the excess will be returned to you then that's great. Either way, only your solicitor can advise you on the terms negotiated so you'll need to persist with your enquiries.

StaceyFTB

Thanks for your reply.
The shortfall. Is the bonus. Which is why we’re giving 7.6 or whatever the value will be. And the remaining will go through on completion. When the bonus is received.
My query is if anyone else had experienced having more than they need in the help to buys. And what happened with there money. Did they not give it all over a exchange. Or give it all over and receive a refund. Which is what I’m lead to believe may happen in my case.
Or hope will ��
And my solicitor can’t even reply to an email. Hence hoping someone has been through this.

masonic

StaceyFTB wrote: »

Thanks for your reply.
The shortfall. Is the bonus. Which is why we’re giving 7.6 or whatever the value will be. And the remaining will go through on completion. When the bonus is received.

I hadn't appreciated you are planning to withhold part of the closing balance of your HTB ISA and not put it towards exchange or completion. Has your solicitor 100% sanctioned this? Others have been told they must part with the whole closing balance of their HTB ISA in order for the bonus to be claimed (even though this is not a specified requirement of the scheme rules).

My query is if anyone else had experienced having more than they need in the help to buys. And what happened with there money. Did they not give it all over a exchange. Or give it all over and receive a refund. Which is what I’m lead to believe may happen in my case.

Plenty of people have been in this situation and posted about it on the forum. Several have seen the money used to reduce the size of the mortgage and this is the most common outcome. While others have said they would be refunded any excess money - I'm not aware of anyone coming back to update us that this actually happened. It really depends upon your solicitor to interpret and apply the scheme rules and YMMV.

neilem

I have been instructed by the solicitor to close the HTB ISA account, so he is able to claim the bonus.

However, upon closing the account, am I able to transfer the money I have in it to another account (which will be used to transfer our deposit to the solicitor), or should I keep that money in that HTB ISA account until the bonus is claimed? I don't want to mess up, in case it invalidates the bonus in any way.

masonic

neilem wrote: »

I have been instructed by the solicitor to close the HTB ISA account, so he is able to claim the bonus.

However, upon closing the account, am I able to transfer the money I have in it to another account (which will be used to transfer our deposit to the solicitor), or should I keep that money in that HTB ISA account until the bonus is claimed? I don't want to mess up, in case it invalidates the bonus in any way.

You can do what you like with the proceeds. The closure letter is what is important for the bonus claim.

jennaemerson

eskbanker wrote: »

Yes, as long as the sale and repurchase is processed via a conveyancer who's registered for HTB work, and that the (re)mortgaging is also formally handled properly too.

a transfer of equity does not involve sale/re-purchase. a transfer of equity is simply transferring my property (and existing mortgage) from my sole name into the joint names of myself and my husband. He has never owned a property before so if I add him to my property and mortgage will he then be able to claim the help to buy ISA?

masonic

jennaemerson wrote: »

a transfer of equity does not involve sale/re-purchase. a transfer of equity is simply transferring my property (and existing mortgage) from my sole name into the joint names of myself and my husband. He has never owned a property before so if I add him to my property and mortgage will he then be able to claim the help to buy ISA?

No, it needs to be a formal at-arms-length sale with each of you being represented by a conveyancer to qualify (the cost of which would negate any benefit from the HTB ISA). Once he becomes a co-owner of the property, he must close or transfer his HTB ISA and will no longer qualify as a FTB.