Help to Buy ISA guide

masonic

mhuk01 wrote: »

Can someone who is not a first time buyer take out one of these isas just for the good interest rate?

I have already bought a property. My future wife has not, and would be able to take out one of these isas. However after we are married we would like to both be listed on the house deeds (there is no mortgage to worry about). Will that affect her ability to get the bonus, as she is on the house deeds? She didn't however purchase the property, that was myself last year..

She is considered a first time buyer until such time as you transfer the property into joint names. She can open a HTB ISA for the good interest rate. I'm not sure what happens if someone ceases to be a first time buyer while holding a HTB ISA, but in all likelihood the bank would require her to close or transfer it to a cash ISA. The bonus can only be claimed as part of a mortgage application and cannot be claimed retrospectively, so is she planning to purchase her own property in the future?

Init20

Just a quick question in regards to the Help to buy isas as I am new to the savings game and I just want to be sure with the tax year ending soon.

I have opened my help to buy isa this tax year (2015-16) and want to continue paying into this going forward. For the 2016-17 tax year will I be allowed to continue to pay into my help to buy isa as well as open a new cash isa that I pay into? Or would I only be allowed to pay into the help to buy isa and I have to use a stocks and shares or other isa wrapper method to get the rest of my tax free allowance for the 2016-17 year?

colsten

Init20 wrote: »

For the 2016-17 tax year will I be allowed to continue to pay into my help to buy isa as well as open a new cash isa that I pay into?

not unless you use a split ISA provider. BUT see below.

Init20 wrote: »

Or would I only be allowed to pay into the help to buy isa and I have to use a stocks and shares or other isa wrapper method to get the rest of my tax free allowance for the 2016-17 year?

You could do that BUT.....most people, and certainly someone who saves for a property, will do much better saving into high interest accounts. With the exception of the HTB ISA, chasing tax-free cash savings is a really bad idea. You will also get a Personal Savings Allowance from 2016-17 onwards, so even as a higher rate tax payer you can get a lot better interest rates than in a normal cash ISA.

S&S ISAs and IF ISAs are a theoretical alternative but they are a lot riskier than cash.

eskbanker

colsten wrote: »

S&S ISAs and IF ISAs are a theoretical alternative but they are a lot riskier than cash.

Not necessarily - if someone is looking at saving over a long period of time then the investment risk in S&S (if invested sensibly) is likely to be less significant than the inflation and shortfall risk in cash.

colsten

Sorry, I should have said ".....if you are planning to use the money for the purchase of the property". I agree that long term S&S ISAs are probably a better choice than cash.

MARTYM8`

One question I wanted clarification on re shared ownership properties - the answer isn't clear in any of the government guidance.

Say you buy a 50% share in a property with a total value of £480,000 in London i.e. you are paying £240,000 for your 50% share for which you will have a mortgage (i.e. within the qualifying threshold).

Can you claim a help to buy ISA bonus as the share you are buying is only £240,000 - or are you ruled out as the property's total value is £480,000 and thus above the £450k limit in the capital (albeit £240k will be owned by your housing association).

Got asked this by a friend thinking of buying an SO property in London - and I didn't know the answer!

masonic

MARTYM8` wrote: »

Can you claim a help to buy ISA bonus as the share you are buying is only £240,000 - or are you ruled out as the property's total value is £480,000 and thus above the £450k limit in the capital (albeit £240k will be owned by your housing association).

I wouldn't say the answer is 100% clear, but the limit is based on the value of the property and the value of the property is independent of the share being purchased.

bowlhead99

You can get one if

the Eligible Conveyancer is satisfied that:
(a) the Help to Buy: ISA Holder will be purchasing, whether solely or jointly, an Eligible Interest in Land;
(b) the purchase of that Eligible Interest in Land will be funded by a loan, which will be secured by a legal mortgage
against that interest in land;
(c) [not BTL unless an exception applies];
(d) the Purchase Price for the Eligible Interest in Land is:
(1)if the Eligible Interest in Land is situated in London, not more than £450,000;
or
(2) if the Eligible Interest in Land is situated outside London, not more than £250,000.

then,
"Purchase Price" means:

(a) in connection with the acquisition of any interest in land other than under the terms of a Regulated Home Purchase Plan, the value of the consideration required to be paid, and which is paid, by the purchaser under the sale and purchase agreement entered into in connection with the acquisition of that interest in land (excluding, for the avoidance of doubt, any consideration attributed to the purchase of any fixtures and/or fittings)

"Eligible Interest in Land" means

a legal interest in land, solely or jointly owned, and situated within the United Kingdom, as described in paragraphs (a) and (b) of the definition of Residential Property Owner

"Residential Property Owner" means

an individual who owns an interest in land, whether in the United Kingdom
or elsewhere, which:
(a)
is in England or Wales:
-freehold;
- leasehold, where the lease was originally granted for a term certain exceeding 21 years; or
- commonhold;
[plus similar for other parts of UK]; and

(b) comprises a building that is used or suitable for use as a dwelling, or is in the process of being constructed or adapted for such use

So if you're buying a property with your spouse or other partner or friend or housing association, you are purchasing an 'eligible interest in land' and if the purchase price for the purchaser (which might be you jointly with your spouse or friend or housing association) is over £450k it is a no go.

However if the housing association is willing to buy the whole property for 480k and then immediately sell you a limited leasehold interest in it for £240k, your 'purchase' of that leasehold interest is under £450k. But I assume it's unlikely they would structure it that way.

Nozza86

Me and my girlfriend are having the exact same problem - we were ready to claim our 25% bonus on the 1st Feb after both saving £1600 in each of our ISA's but have yet to receive the bonus!!

We were advised by our solicitor to not close our ISA's down yet as the firm are still unable to request the funds from the government scheme as their 'portal' or 'system' has not gone live yet... and it still hasn't!! The seller has held on for us anyway so this further delay really worries me!

I am also worried that when we do get the green light we'll find out that we can't actually use the bonus towards our deposit and it will just come off the purchase price?! - In which case won't benefit us at all right now!

Any help or info would be greatly appreciated!!!??

FIRSTTIMEBUYER89

We are ready to sign our contracts and mortgage deeds this week and aiming for completion on the 11th April.

Our solicitor has not come across the Help to Buy ISA yet and we will be the first to use it so I am after some advice.

Do we pay our solicitor the full 10% of the purchase price at exchange, if so when is the bonus paid and who does it go to? Do we use it towards fees for the solicitor? or does our mortgage amount borrowed go down by the bonus amount?

We wont get a lot but it is still £950 between me and my partner so worth us doing.