Help to Buy ISA 22 September 2016 at 11:46PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 14 replies 2.5K views

rocketsauce

Hi,

I've never owned a home and have always rented.

I meant to get a Help to Buy ISA when they first came out but didn't get round to it. I saw news articles saying that the ISAs were a con because you didn't get the money until after the purchase of the property.

I've read the advice on here but wondered what people think, is it still worth getting one?

I'm considering it as I feel I should at least try to save something towards a deposit. I feel like I'll never be able to save enough though!

Thanks

eskbanker

rocketsauce wrote: »

I saw news articles saying that the ISAs were a con because you didn't get the money until after the purchase of the property.

Not sure where that myth comes from but the government's 25% bonus is only usable towards the property purchase and has to be contributed to the funds used in the transaction, so ignore anyone claiming it's afterwards!

Some were under the mistaken impression that the bonus would be available for use when exchanging contracts rather than at transaction completion, but the official line on this has always been clear, even though those who didn't read enough of the small print are often vocally unhappy about this.

So I'd say go for it, where else will you get that sort of return on your money?

shoaibs48

The rates on help to buy isas are better then normal isas by a mile. The 25% bonus is used to reduce your morgage repayments and not added onto your deposit which is what the confusion was.

thomasfox

shoaibs48 wrote: »

The 25% bonus is used to reduce your morgage repayments and not added onto your deposit

True, it cannot be used to increase a deposit, but you can cover/fund any other upfront purchasing costs as well as your mortgage repayments.

xylophone

but didn't get round to it.

I'm considering it as I feel I should at least try to save something towards a deposit.

"If not now, when?".....:)

eskbanker

shoaibs48 wrote: »

The rates on help to buy isas are better then normal isas by a mile. The 25% bonus is used to reduce your morgage repayments and not added onto your deposit which is what the confusion was.

thomasfox wrote: »

True, it cannot be used to increase a deposit, but you can cover/fund any other upfront purchasing costs as well as your mortgage repayments.

Not sure if it's what you're suggesting but just to be clear, the HTB bonus can't be used for mortgage repayments or purchase costs other than the property itself and is used for increasing a deposit (thereby effectively reducing the mortgage value) but the key thing is to understand that the term 'deposit' means different things to different people.

http://www.moneysavingexpert.com/savings/help-to-buy-ISA#exchange explains that the HTB bonus is used as part of the deposit at the time of completion of the purchase (i.e. the gap between mortgage and property value), but some use the term 'deposit' for the advance fee paid earlier in the process (exchange rather than completion), which the bonus can't be used for. See also https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#can-i-use-for-deposit

Flobberchops

Go for it. Even if you end up using a HTB ISA as a glorified cash ISA for anything and everything but a house deposit, you're still earning several times more interest than in a standard cash ISA.

It reduces your cash ISA subscription allowance? Good, you should be investing in stocks and shares anyway

rocketsauce

Hi,
Thanks for all your help.
Am I right in thinking that once the money is in the ISA you can't take it out?
I'll have a browse of the different ones, not sure where the best rates are at the moment.

marliepanda

rocketsauce wrote: »

Hi,
Thanks for all your help.
Am I right in thinking that once the money is in the ISA you can't take it out?
I'll have a browse of the different ones, not sure where the best rates are at the moment.

I'm with Santander and you can take it out at any point.


Obviously you lose your bonus etc.

shoaibs48

rocketsauce wrote: »

Hi,
Thanks for all your help.
Am I right in thinking that once the money is in the ISA you can't take it out?
I'll have a browse of the different ones, not sure where the best rates are at the moment.

You can take the money out anytime but you can't pay more then £200 a month into the account except the first month when you can put £1000 deposit and £200 for that month.

barclays 2.27% seems the best rate available online. There are others but aren't available online

rocketsauce

Thanks.
Say I had £500 in the ISA and wanted to take £100 out, would I just lose that percentage of the bonus? What if I put more in later on, would I still get the bonus?
Sorry, not very clued up on this!