Help to Buy ISA & Solicitor

Picklethekitten

Hi all

I'm a first time buyer with my boyfriend and we wish to use the Help to Buy ISA bonus on our purchase of a new build house. I emailed the solicitor last week to let them know that we wanted to use it and find out which documents they'd need, and this is part of the reply I got today:

"Help to Buy require 5 working days to process the bonus request. The application requires contracts to have been exchanged before making the application therefore on the website HTB confirms the bonus should be used for the contribution towards to the purchase price and not the deposit."

Is this correct? I thought the bonus could be used as part of your deposit and that it needed to be done before exchange but can't find anything that words it for definite either way. On helptobuy.gov.uk/help-to-buy-isa/faq/ it says this:

"When you are close to finishing your purchase, you will need to let your Help to Buy: ISA provider know, and close your account. Don’t just withdraw all of your money – let your ISA provider know that you are closing your account and they will provide you with a closing letter. You will need to take this letter to your solicitor or conveyancer so that they can apply for your bonus. They will add this to the other money you are putting towards your first home."

Is close to finishing purchase, close to exchange or completion? When the money is added, is it added pre or post completion and therefore does it form part of the deposit or not? If it was taken off after exchange and not off the deposit then surely I'd need to notify the bank providing the mortgage as they'd be lending me too much money.

I said that we needed to wait until March so there is enough in both of our ISAs as one was opened December 2015 and one in January 2016 but I think she missed the point as she then went on to say that we could use the £1,400 and £1,600 in our ISAs as part of the deposit but we'd need £1,600 in each, hence waiting until March.

The property is a new build and should be ready in March, what are the chances of us delaying exchange? Annoyingly we have used the builder's recommended solicitors who are proving to be sloppy with paperwork full of spelling mistakes and they don't reply to emails without a chaser.

Sorry if I've missed anything imported or worded this confusingly! And thank you for any responses and help in advance

Thrugelmir

Picklethekitten wrote: »

Is this correct?

Yes it is.

Picklethekitten

So will I need to let the lender know as otherwise I'll receive the bonus but already have paid the full sale price with my deposit and mortgage? Is it going to be an issue to do so as the broker will have already submitted a full application to the lender?

Thrugelmir

Picklethekitten wrote: »

So will I need to let the lender know as otherwise I'll receive the bonus but already have paid the full sale price with my deposit and mortgage? Is it going to be an issue to do so as the broker will have already submitted a full application to the lender?

In that case the bonus will be refunded to you. There's no need to take any action.

The point still stands that the bonus cannot be used to fund the deposit at the point of exchange of contracts.

The concept behind the scheme is to encourage the discipline of saving and get people used to paying a monthly commitment. Then when the mortgage starts in earnest it's ground in as a routine already.

Picklethekitten

I've done some more digging and found on the MSE guide it says under point 8:

'The solicitor then uses the letter to apply online for the government bonus, which they can use along with your Help to Buy ISA funds (plus any other savings) as your deposit for your first home.'

moneysavingexpert.com/savings/help-to-buy-ISA

Doesn't this contradict the solicitor? I basically just want to make sure I don't close it too early or late and end up unable to use the bonus.

Sorry if I am missing something obvious! I was led to believe the ISA was designed to get people to save and help boost your deposit but it would appear from advice I was wrong.

Gti

If you refer to my thread here https://forums.moneysavingexpert.com/discussion/5408691
you'll see I spoke to my solicitor about the ISA and they informed me they won't be able to claim on it until March 31st as that is when the government portal comes online.
Unless your purchase completes after that time it doesn't seem you can get the bonus.

anselld

Picklethekitten wrote: »

I've done some more digging and found on the MSE guide it says under point 8:

'The solicitor then uses the letter to apply online for the government bonus, which they can use along with your Help to Buy ISA funds (plus any other savings) as your deposit for your first home.'

moneysavingexpert.com/savings/help-to-buy-ISA

Doesn't this contradict the solicitor? I basically just want to make sure I don't close it too early or late and end up unable to use the bonus.

Sorry if I am missing something obvious! I was led to believe the ISA was designed to get people to save and help boost your deposit but it would appear from advice I was wrong.

There are two meanings to "deposit"...
(1) The amount you pay at exchange to secure the purchase, usually 10%
(2) The total amount you pay towards the purchase from your own funds/equity - 20, 25, 40% or whatever.

The MSE article presumably refers to the second definition.

More importantly, if you do not trust your Solicitor to advise you correctly why are you still using them?

Lungboy

Picklethekitten wrote: »

I've done some more digging and found on the MSE guide it says under point 8:

'The solicitor then uses the letter to apply online for the government bonus, which they can use along with your Help to Buy ISA funds (plus any other savings) as your deposit for your first home.'

moneysavingexpert.com/savings/help-to-buy-ISA

Doesn't this contradict the solicitor? I basically just want to make sure I don't close it too early or late and end up unable to use the bonus.

Sorry if I am missing something obvious! I was led to believe the ISA was designed to get people to save and help boost your deposit but it would appear from advice I was wrong.

Annoyingly, there are 2 deposits. There is the 10% you need for exchange, and then there's the deposit you're adding to the mortgage for the overall purchase. It sounds like you want the ISA for the former while it is designed for the latter.

anselld

... however this suggests there must be a way ...
http://www.moneysavingexpert.com/news/savings/2016/02/first-help-to-buy-isa-bonuses-paid-out-as-couple-from-colchester-bag-800-between-them