Help to Buy ISA guide

alandaniel132

Hi, is the Help to Buy account interest is consider the total saving for calculation of bonus?

Let say my total deposited money is £2,000. Interest get from Barclays bank is £100.
The total saving is £2,100 and the bonus is £2,100 * 25% ?

eskbanker

alandaniel132 wrote: »

Hi, is the Help to Buy account interest is consider the total saving for calculation of bonus?

Let say my total deposited money is £2,000. Interest get from Barclays bank is £100.
The total saving is £2,100 and the bonus is £2,100 * 25% ?

Yes, as per bullet point #2 of the article this thread is all about:

The state adds 25% tax-free to whatever is in the ISA when you use it to buy a home

[...]

at the point you use the ISA to buy your first home, all the money you have put in and the interest will have 25% added to it

alandaniel132

Thanks for your reply.

Meaning, all the money that I deposited in HTB, plus the bank interests will have 25% bonus added in it.
So, if every month £200, it need less than 5 months to get the maximum bonus

Alexland

The HTB ISA maximum bonus is £3,000 which would require a closing account balance of at least £12,000.

alandaniel132

Alexland wrote: »

The HTB ISA maximum bonus is £3,000 which would require a closing account balance of at least £12,000.

so which mean £12,000 is not my all deposit money, a small portion (around £500) is from the interested over the 4 years.

Home34

Firstly I'm sorry if this is obvious or if this has already been answered.

My partner and I are both first time buyers and we each have a Help to Buy ISA. We're looking to purchase a flat that is in need of £10'000 to £15'000 worth of improvements (we have around £6'000 available we can put towards this). The flat is currently on at £125'000 but we're thinking of offering £115'000 due the required improvements. Minus the H2B bonus, we have a total of just over £15'000 saved between us.

Now here's my question. I understand that the bonus from the ISA only gets paid in the final completion stage and must be used as part of the sale, however the actual money we have saved (minus the bonus deposit) can that be used for other things ie improvements? To me, this part of Help to Buy doesn't seem to clear to me.

Thanks in advance for any advice you can offer. We did contact a local solicitor but they weren't sure..

masonic

Home34 wrote: »

Now here's my question. I understand that the bonus from the ISA only gets paid in the final completion stage and must be used as part of the sale, however the actual money we have saved (minus the bonus deposit) can that be used for other things ie improvements? To me, this part of Help to Buy doesn't seem to clear to me.

Thanks in advance for any advice you can offer. We did contact a local solicitor but they weren't sure..

The rules state only that the bonus must be used towards the purchase. There is no rule stating the closing balance of the ISA must be used. Solicitors vary in their interpretation of the rules, so it would be best to discuss this and agree it up front.

Rich2808

Alexland wrote: »

The HTB ISA maximum bonus is £3,000 which would require a closing account balance of at least £12,000.

In other words to claim the maximum bonus you would need to hold a help to buy isa for at least 55 months - or 4 years and 7 months - assuming you invest £1200 in month 1 and £200 every month after.

Alexland

Rich2808 wrote: »

In other words to claim the maximum bonus you would need to hold a help to buy isa for at least 55 months - or 4 years and 7 months - assuming you invest £1200 in month 1 and £200 every month after.

Yes or maybe a bit less if you can earn a bit of interest during the period.

eskbanker

Alexland wrote: »

Rich2808 wrote: »

In other words to claim the maximum bonus you would need to hold a help to buy isa for at least 55 months - or 4 years and 7 months - assuming you invest £1200 in month 1 and £200 every month after.

Yes or maybe a bit less if you can earn a bit of interest during the period.

Agreed - according to a quick calculation, a fully-funded HTB ISA earning a constant 2.5% AER over its term will reach £12K after 4 years and 4 months, thanks to about £600 worth of interest being added in the first four completed years.