Help to Buy ISA guide

ponchoman

I think the references to the "split ISA" are causing all sorts of confusion as notapro mentions. Can the web page administrators please change the content on the Help to Buy ISA guide to not suggest this is actually a product. To re-iterate this is not available from any bank or building society but a suggestion to split your savings between a Cash ISA and a Help to Buy ISA.

jimjames

WLITC wrote: »

Should should I just get a high interest savings account? Is the argument that the interest rate is higher and therefore it will nulify the tax saving of an ISA?

Yes and yes.
5% taxed is still more than 1% tax free. There is no point building up long term tax free status on money you'll be spending in 18 months.

jimjames

ponchoman wrote: »

To re-iterate this is not available from any bank or building society but a suggestion to split your savings between a Cash ISA and a Help to Buy ISA.

But it's an option only available at a small number of banks/building societies. As previously stated it's of very limited benefit as most people will get a vastly better return NOT using a cash ISA. The HTB ISA is a non brainer for most people though.

Notapro wrote: »

Archi Bald, true though there's no way you could get a better return than the 25% bonus offered with the help to buy ISA long term unless you took your savings to the casino and put them all on black

Not strictly true. You could almost certainly beat 25% bonus over the long term using S&S ISAs but it's not guaranteed although not the same risk of losing 100% that you've got with going to casino. It's definitely not something that would be a good idea for anyone saving for a property though.

Notapro

@ JimJames, Okay there's no better Guaranteed return than the 25% bonus offered with a help to buy ISA, nothing to stop you subscribing to a S&S ISA along with this as you're going to be so far from reaching your deposit allowance even contributing the maximum amount each month. Though if you have £15,240 to save then you probably don't need that much "help to buy"

Archi_Bald

I don't think anyone has ever suggested that first time buyers should not make use of the HTB ISA, and specifically not the 4% one from Halifax. It's a great product for those eligible.

But what makes little sense for almost all of them, and almost everyone else, too, is a normal cash ISA. Therefore the whole talk about split ISAs should be irrelevant for most people. It should come with a massive health warning as it is designed to deprive people from making the most of their money.

As to S&S ISA for FTBs: that's a potentially even worse approach than a normal cash ISA. What if the market tanks in the next 2-5 years when you want to put your deposit down? Aside from that, nobody should ever venture into investments if they don't have a good emergency cash fund already. Suitability of S&S ISA for a typical FTB is about 1 on a scale from 1-10, where 1 is worst and 10 is best.

Notapro

Archi_Bald wrote: »

I don't think anyone has ever suggested that first time buyers should not make use of the HTB ISA, and specifically not the 4% one from Halifax. It's a great product for those eligible.

But what makes little sense for almost all of them, and almost everyone else, too, is a normal cash ISA. Therefore the whole talk about split ISAs should be irrelevant for most people. It should come with a massive health warning as it is designed to deprive people from making the most of their money.

As to S&S ISA for FTBs: that's a potentially even worse approach than a normal cash ISA. What if the market tanks in the next 2-5 years when you want to put your deposit down? Aside from that, nobody should ever venture into investments if they don't have a good emergency cash fund already. Suitability of S&S ISA for a typical FTB is about 1 on a scale from 1-10, where 1 is worst and 10 is best.

I Agree with your comment regarding the suitability of a S&S ISA with the average FTB, what are your suggestions regarding the rest of the funds? Are you saying to avoid a cash ISA to run alongside the HTB purely because of the low interest rates available on these currently and the higher rate of interest you're able to receive on certain current accounts and regular savers?

Archi_Bald

You can stick at least £50K into accounts that pay better interest than cash ISAs.

ponchoman

However not everyone has £50K to invest, i certainly wish i did. Lower level deposits will generally not attract the best rates available, however you have to look on the positives with the Help to Buy as the £3000 bonus has to be a good thing, surely?

Archi_Bald

ponchoman wrote: »

However not everyone has £50K to invest, i certainly wish i did. Lower level deposits will generally not attract the best rates available, however you have to look on the positives with the Help to Buy as the £3000 bonus has to be a good thing, surely?

Can I just repeat that I said, only 2 posts ago, that the Halifax HTB ISA is a great product for those eligible. Please make an effort to read what has been said.

I am also not talking about investing £50K but about cash savings of up to £50K. You can get 5% for as little as £1 in some accounts, so please do some more research before making claims that are highly misleading.

Information about best places to put your cash is all available on a plate on this website. One thread that you might wish start with is the one on best available interest rates, but please spend some time locating other information that is available all over MSE.

Alison45

Does the £250,000 limit on the house price apply if it is a joint purchase with another individual who does not have a help to buy ISA or would the £250,000 limit apply to "half of the property" in effect allowing up to £500,000 purchase price?