Help to Buy ISA guide

Bridlington1

john8solo said:

Hi all, I've just reached the 12k threshold on my Help to Buy isa with Barclays. It's just now that I'm finding a lack of information as to what to do next!? I've called Barclays and I'm not totally convinced by what they said in reply to my questions.

1. Do i keep paying the £200pm max, or do i need to pay a minimum to keep the account open? They said i don't have to pay anything now. I can stop the DD payments. The account will stay open by leaving the money there until my solicitor applies for it when we finally buy our 1st house. 

2. What will the interest rate be now the account has gone above 12k? 
(Eg: HSBC is 0.65%) After a long wait, the best answer they could find is that the rate is variable. Natwest is 0.55 atm. So i imagine Barclays rate will be around the same. 

(Why keep paying £200pm at 0.65%, when i can pay that money into my Chase account at 2.7%). 

Hope this helps and pls let me know if this info is wrong at all? 

How long will it be before you buy? As the interest rate on the H2B ISA is only 1.8% what you could do is withdraw some of the money into a higher paying account then top it back up to £12k over however long. 
E.g. say you wanted to buy in 12 months time. Withdraw £2.4k now and stick it in a higher paying account, then pay £200/mth back into the H2B ISA for the next year so that when it comes to buying you will have £12k in the H2B ISA but will have earned more interest.

dekkard

Bridlington1 said:

john8solo said:

Hi all, I've just reached the 12k threshold on my Help to Buy isa with Barclays. It's just now that I'm finding a lack of information as to what to do next!? I've called Barclays and I'm not totally convinced by what they said in reply to my questions.

1. Do i keep paying the £200pm max, or do i need to pay a minimum to keep the account open? They said i don't have to pay anything now. I can stop the DD payments. The account will stay open by leaving the money there until my solicitor applies for it when we finally buy our 1st house. 

2. What will the interest rate be now the account has gone above 12k? 
(Eg: HSBC is 0.65%) After a long wait, the best answer they could find is that the rate is variable. Natwest is 0.55 atm. So i imagine Barclays rate will be around the same. 

(Why keep paying £200pm at 0.65%, when i can pay that money into my Chase account at 2.7%). 

Hope this helps and pls let me know if this info is wrong at all? 

How long will it be before you buy? As the interest rate on the H2B ISA is only 1.8% what you could do is withdraw some of the money into a higher paying account then top it back up to £12k over however long. 
E.g. say you wanted to buy in 12 months time. Withdraw £2.4k now and stick it in a higher paying account, then pay £200/mth back into the H2B ISA for the next year so that when it comes to buying you will have £12k in the H2B ISA but will have earned more interest.

I would transfer the Barclays HTB ISA to HSBC which pays 2.25% on amounts up to £12,000. I've read that it will go up to 2.5% soon but can't find confirmation on the HSBC site yet.

Withdrawing money from an ISA means it loses its tax-free benefits. Why do that?

Bridlington1

dekkard said:

Bridlington1 said:

john8solo said:

Hi all, I've just reached the 12k threshold on my Help to Buy isa with Barclays. It's just now that I'm finding a lack of information as to what to do next!? I've called Barclays and I'm not totally convinced by what they said in reply to my questions.

1. Do i keep paying the £200pm max, or do i need to pay a minimum to keep the account open? They said i don't have to pay anything now. I can stop the DD payments. The account will stay open by leaving the money there until my solicitor applies for it when we finally buy our 1st house. 

2. What will the interest rate be now the account has gone above 12k? 
(Eg: HSBC is 0.65%) After a long wait, the best answer they could find is that the rate is variable. Natwest is 0.55 atm. So i imagine Barclays rate will be around the same. 

(Why keep paying £200pm at 0.65%, when i can pay that money into my Chase account at 2.7%). 

Hope this helps and pls let me know if this info is wrong at all? 

How long will it be before you buy? As the interest rate on the H2B ISA is only 1.8% what you could do is withdraw some of the money into a higher paying account then top it back up to £12k over however long. 
E.g. say you wanted to buy in 12 months time. Withdraw £2.4k now and stick it in a higher paying account, then pay £200/mth back into the H2B ISA for the next year so that when it comes to buying you will have £12k in the H2B ISA but will have earned more interest.

I would transfer the Barclays HTB ISA to HSBC which pays 2.25% on amounts up to £12,000. I've read that it will go up to 2.5% soon but can't find confirmation on the HSBC site yet.

Withdrawing money from an ISA means it loses its tax-free benefits. Why do that?

It depends on your tax status and which account you move the money to. The HSBC H2B ISA currently pays 2.25% so if my maths serves me correctly:

• If you area basic rate 20% taxpayer any non-ISA account paying more than 2.8125% will give you more interest post tax than the ISA
• If you are a higher rate 40% taxpayer any non-ISA account paying more than 3.75% will give you more interest post tax than the ISA
• If you are an additional rate 45% taxpayer any non-ISA account paying more than 4.090909....% will give you more interest post tax than the ISA

So on this basis a basic rate taxpayer can very easily get more interest by moving money from the H2B ISA into a non-ISA account e.g. the chase account you already have at 3%. There are also regular savers and the Barclays rainy day saver paying larger amount of interest

Moreover there are also flexible easy access cash ISAs which pay more than 2.25%, e.g. VM exclusive ISA at 3% so if you haven't used your full £20k ISA allowance yet then even an additional rate taxpayer would benefit from moving their money as detailed in my previous post.

dekkard

HSBC Help to Buy ISA (Available to existing HSBC customers via transferring in.)

Interest rate now increased to 2.50% AER on balances up to £12,000. 1.20% for money over £12,000.

dekkard

Barclays rate has also gone up to 2.02% AER

https://www.barclays.co.uk/savings/interest-rates/help-to-buy-isa/

garfield33

Halifax HTB ISA has gone up to 2.00% (then 0.7% over £12k), as of 24/2/23
https://www.halifax.co.uk/assets/pdf/savings/pdf/interest-rates.pdf

dekkard

HSBC Help to Buy ISA (Available to existing HSBC customers via transferring in.)

As of 20th April 2023, interest rate to go up to 2.75% AER on balances up to £12,000. 1.30% for money over £12,000.

montheton

I`ve got a HTB ISA and got to the limit of the HTB ISA bonus limit,  do you think its best to stop paying into it having got to the bonus limit and start paying into a new ISA?

dekkard

montheton said:

I`ve got a HTB ISA and got to the limit of the HTB ISA bonus limit,  do you think its best to stop paying into it having got to the bonus limit and start paying into a new ISA?

Do you mean you've got £12k in it?

Assuming you've paid into the HTB ISA this tax year and want to keep it, you'll only be able to additionally pay into either a Stocks & Shares, Lifetime or innovative finance ISA.

montheton

Yes 12k, think I`ll just keep paying into it till March then open a different ISA.