Help to Buy ISA guide

Rich2808

eastlad wrote: »

Hi, firstly thank you for your response.

I knew these came into effect in December however my savings are already in a cash ISA. I was advised I would have to close this ISA in order to open a Help to Buy. If I did this I would lose any interest gain between April-Dec on that ISA. Therefore I am waiting to open a Help to Buy in April.

Have I been misinformed here?

You could move it to Nationwide.

Get referred by a friend and open a flex direct current account via Quidco - you could get up to £180k cashback. The flexdirect pays 5 per cent on up to £2500 and you can open a £500 a month 5 per cent regular saver too. You would be eligible for the flexclusive ISA which pays a tolerable 1.4 per cent if you want an ISA as well as the help to buy isa.

But there are other current accounts paying good interest like TSB, Tesco etc.

mooluk26

Bigdanm89 wrote: »

I'm also a little confused. I thought the whole point of the ISA was to assist in saving up a deposit, but as you mention in the conveyancer studies it states it's not for any deposit funds and is to contribute to the overall cost of the purchase of a house.

Easier said than done when you have a mortgage offer on the table for a set amount, any bonus would potentially mean having to get a new offer so it all added up to the full purchase price.

I think this needs more attention. The MSE page is littered with references as to how you can boost your deposit with this scheme, but the Conveyancer FAQ is clear that this bonus is for completion and not exchange, it explicitly states it is not for use as a deposit. I have no idea how this will work when we complete, is my bonus going to form an overpayment on my mortgage?

colsten

Rich2808 wrote: »

You would be eligible for the flexclusive ISA which pays a tolerable 1.4 per cent if you want an ISA as well as the help to buy isa.

This is true but a first time buyer would get 2% in the Nationwide Save To Buy ISA (same rate as their HTB ISA). Though as you say, there are other non-ISA accounts that pay better interest than normal cash ISAs.

colsten

mooluk26 wrote: »

the Conveyancer FAQ is clear that this bonus is for completion and not exchange, it explicitly states it is not for use as a deposit.

What is actually says is "You should put the bonus money which you receive towards the completion of the property". It does not say "it is not for use as a deposit".

eastlad

Thank you both for the advice.

mooluk26

colsten wrote: »

What is actually says is "You should put the bonus money which you receive towards the completion of the property". It does not say "it is not for use as a deposit".

Section 8.4 (C) of the Conveyancer Guidelines:

(C) Bonus funds remain the property of HM Treasury until applied to the purchase of an eligible property. Until the Bonus is used for a property purchase, it must be held in the Conveyancer Client Account. The Bonus cannot be used for a deposit. It must contribute towards the funds consolidated at the completion of the property transaction.

From the Conveyancer FAQs:

Is the bonus money intended for exchange or completion?
You should put the bonus money which you receive towards the completion of the property.

Deposit is paid at exchange, so I don't see how this is saying anything other than the the bonus is to be taken off the total price of the house. This makes the scheme almost useless to a first time buyer, apart from the obvious benefit of slightly reducing the cost of the house.

Archi_Bald

mooluk26 wrote: »

Deposit is paid at exchange, so I don't see how this is saying anything other than the the bonus is to be taken off the total price of the house. This makes the scheme almost useless to a first time buyer, apart from the obvious benefit of slightly reducing the cost of the house.

How is up to £3,000 free money "almost useless to a first time buyer"? If you feel it is, you are free not to apply for it.

mooluk26

Archi_Bald wrote: »

How is up to £3,000 free money "almost useless to a first time buyer"? If you feel it is, you are free not to apply for it.

When the intention of the scheme is to literally "help people to buy" their first home, I don't see how this bonus can now fulfill that objective. If it doesn't form part of a deposit, it's not helping savers who are struggling in that department, and it won't help with LtV either. Yes, it's a fantastic bonus potentially getting upto £6,000 taken off your mortage after 5 years of saving, but how does that work with respect to overpayment? There is no guidance on that.

The scheme has been interpreted as helping with a deposit, even the MSE page states this. I think clearer guidance is needed to explain how we are supposed to use this.

colsten

mooluk26 wrote: »

Section 8.4 (C) of the Conveyancer Guidelines:

I was referring to the FAQ that you quoted. I agree the Conveyancer Guidelines are more explicit on the matter.

mooluk26 wrote: »

Deposit is paid at exchange, so I don't see how this is saying anything other than the the bonus is to be taken off the total price of the house. This makes the scheme almost useless to a first time buyer, apart from the obvious benefit of slightly reducing the cost of the house.

Whilst I appreciate you have highlighted a potential cashflow issue, somebody who couldn't put a deposit down without the bonus should perhaps delay their buying decision for a bit longer.

Steffanie03

Hi,me and my partner have a Htb isa each that we started in Dec with the initial £1200, £200 in Jan and £200 in Feb. So £1600 in each one. We are due to exchange contracts on our first home next week and I'm becoming extremely worried. Both my solicitor and my bank (lloyds) have no clue how to claim the money we are owed from the government. The only help they have provided is that we have to close the account and give the closing documents to the solictor. But my solictor has no idea how to get the money and I feel like I'm doing all the running around someone please help urgently. This is £800 bonus we are talking. There is also no importation on the hmrc website either.