5% deposit and help to buy ISA

bobobski

I'm currently weighing up a number of vastly different options but the one I'm most confused about is the scenario where I take out a 95% mortgage (already lined up so availability not an issue) and want to use my help to buy ISA balance towards the 5% deposit. Any experience with this? Will sellers avoid me like the plague? Should I find the balance of the ISA somewhere else so I can give a 5% deposit on exchange, and then reduce the mortgage by the balance of the ISA?

juniordoc

Buying with only a 5% deposit when prices are stagnant and interest rates can only go up is very risky. I'd be trying my hardest to get to a 10% deposit first, you'll find a better mortgage rate too.
In terms of the HTB bonus, you won't get that until you close the account so you can't count in it for the initial holding deposit.

bobobski

Thanks JD but as I said I'm working through lots of different scenarios and this is just one of them. House prices in my area aren't stagnant unfortunately and it will take me at least another year to save up another 5% in which time house prices will probably have risen by the same proportion, leaving me still not reaching the 10% level.

I'm curious as to how the 5% deposit and HtB bonus work together, precisely because of the timing of when you're paid the bonus as you mentioned.

PrettyFlower90

We've just bought our first house using the HTB ISA and only 5% deposit. Like you, we would have really liked to save for 10% but to be honest would have taken us a lot longer. I never factored in the bonus when doing our sums and budget only what money we actually had saved. That way you know what money to have and if you can afford the deposit.


Although, we're in Scotland so we never handed over money prior to date of entry, so our solicitor had our bonus before hand and so we just sent our deposit money to them minus the bonus amount.

bobobski

Thanks PrettyFlower, good to know it's possible! So did you put down a 5% deposit and take out a mortgage of 95% minus the value of the bonus? I think that's where I'm headed. Luckily I've got some wiggle room in my budget and actually keep forgetting about the bonus so it really will be a bonus!

Congratulations on buying your first house by the way