Help to Buy ISA guide

josie_xo

I have £2000 in my halifax hbt isa and my boyfriend has £10000, so combined we have reached the £12000 limit for max government £3000 input, do we now stop putting money into this account or will more money combined mean more government input? (And the 3000 only applies to one account?)  Many thanks 

masonic

It's a max bonus of £3000 per account and no limit to the balance you can save for interest (subject to your provider not having its own limit)

Middle_Sister

eskbanker said:

Middle_Sister said:

Okay. This is what I am thinking of doing. Can you please advise me if its right.
I plan to transfer £4k from my £12k HTB ISA either into a S&S LISA or a cash LISA. I'll keep adding £200 into my HTB ISA and just use it as a saving vehicle as the rate is pretty good then next tax year transfer another £4k across into my LISA and the same the following year.  Then I plan to put £20k into a S&S ISA each tax year starting now.

Nobody can say if it's 'right' but it's certainly possible and legitimate.  What are you hoping to achieve, in terms of if/when you'll be looking to get onto the property ladder and when you're likely to need each of your pots of money?  In general, stick to cash-based products for anything needed within the next five years....

Thanks for that.  I was a bit worried about whether I'd be allowed to contribute to the 3 accounts at the same time.

eskbanker

Middle_Sister said:

eskbanker said:

Middle_Sister said:

Okay. This is what I am thinking of doing. Can you please advise me if its right.
I plan to transfer £4k from my £12k HTB ISA either into a S&S LISA or a cash LISA. I'll keep adding £200 into my HTB ISA and just use it as a saving vehicle as the rate is pretty good then next tax year transfer another £4k across into my LISA and the same the following year.  Then I plan to put £20k into a S&S ISA each tax year starting now.

Nobody can say if it's 'right' but it's certainly possible and legitimate.  What are you hoping to achieve, in terms of if/when you'll be looking to get onto the property ladder and when you're likely to need each of your pots of money?  In general, stick to cash-based products for anything needed within the next five years....

Thanks for that.  I was a bit worried about whether I'd be allowed to contribute to the 3 accounts at the same time.

You wouldn't be contributing as such to three accounts at the same time though, you'd only be paying new money into the S&S ISA and the HTB ISA, while transferring old money into the LISA?  I hadn't spotted that the amounts don't work - if you're paying £2,400 into the HTB then that only leaves £17,600 of your allowance to put into the S&S ISA....

leitmotif

I've just read that the Help to Buy ISA bonus is only available for those reliant on mortgage financing. When my partner and I opened Help to Buy ISAs, we were in a position where taking a mortgage out was self-evident. Now we could afford to buy a house at the maximum price for the Help to Buy scheme in cash. Now, it might be that when we find a property we like, it's over £250K and we choose to forgo the £6K bonus from the Help to Buy scheme. But if we choose to buy a property under £250K, what's the maximum loan-to-value ratio that's acceptable in order to qualify for the bonus? For example, could you take out a mortgage for £1 just to qualify?

kuratowski

If you can buy a house for cash then why would you need a bonus from the government?

Alexland

leitmotif said:

I've just read that the Help to Buy ISA bonus is only available for those reliant on mortgage financing. When my partner and I opened Help to Buy ISAs, we were in a position where taking a mortgage out was self-evident. Now we could afford to buy a house at the maximum price for the Help to Buy scheme in cash. Now, it might be that when we find a property we like, it's over £250K and we choose to forgo the £6K bonus from the Help to Buy scheme. But if we choose to buy a property under £250K, what's the maximum loan-to-value ratio that's acceptable in order to qualify for the bonus? For example, could you take out a mortgage for £1 just to qualify?

There is no minimum LTV under the HTB ISA rules but reasonably there are costs to arrange and redeem a mortgage, Lenders will have their own minimum loan values and I doubt it's worth compromising on your choice of property to keep it within the £250k price cap. If you can afford a bigger property by taking an affordable mortgage that would usually be a better investment long term.

kuratowski said:

If you can buy a house for cash then why would you need a bonus from the government?

With a net asset position of over £1m we don't particularly need £2k pa of LISA bonuses from the government but we take it anyway to partially offset the stupid amount of higher rate tax we paid in our 20s before learning how to optimise our income for tax efficiency.

kuratowski

Alexland said:

With a net asset position of over £1m we don't particularly need £2k pa of LISA bonuses from the government but we take it anyway to partially offset the stupid amount of higher rate tax we paid in our 20s before learning how to optimise our income for tax efficiency.

Good answer.  Just the other day, I was looking at my historic tax returns and I was paying (effectively) 60% tax on my interest income for a number of years

leitmotif

Alexland said:

There is no minimum LTV under the HTB ISA rules but reasonably there are costs to arrange and redeem a mortgage, Lenders will have their own minimum loan values and I doubt it's worth compromising on your choice of property to keep it within the £250k price cap. If you can afford a bigger property by taking an affordable mortgage that would usually be a better investment long term.

Some good points here, Alexland. Many thanks. Another option not ruled out is to buy more than one property, with a mortgage (and therefore the bonus) for one.

Alexland

leitmotif said:

Some good points here, Alexland. Many thanks. Another option not ruled out is to buy more than one property, with a mortgage (and therefore the bonus) for one.

Yes or maybe one each to avoid the extra stamp duty on a second home but then you'd have duplicate mortgages (to claim both HTB ISAs) and legal costs. Did you want to pay double bills for a holiday home or rent one out with the associated tenant hassle and tax implications? Surely there's a limit to how much you would want to compromise your situation to claim these bonuses?