Help to Buy ISA - Technicality

Lils37

Hi All,

My girlfriend and I are in the process of buying a new home. In the first instance her father will be buying the property outright and putting it in our name, he is also paying for building works on the property. We will then take a mortgage out to buy the property off him.

Our solicitors have advised that because we will have no mortgage we are therefore not eligible for the Help to Buy ISA bonus and won't be eligible further down the line because, technically, we have already owned a property.

Our immediate thought was to put the property in her fathers name as this would solve the ISA problem. The issue being that we then will have to pay stamp duty twice (once in our repayment to her father and second when we purchase the property from him) - this amount equates to more than we gain from the ISA bonus.

I've been reading through legislation but struggling to see how we can qualify for the bonus in a way that doesn't leave us out of pocket.

Does anyone have advice / thoughts on how we could get this to work?

Thank you

aneary

Why can't you buy the property instead of her father buying it?

Marvel1

Buy the house yourself in your name.

Pixie5740

It's not a technicality. You will in fact, legally, own a property at the time you try to claim your HTB ISA bonus.

I too am curious as to why all the faffing about. Why don't you just buy the property using a mortgage? If your girlfriend's father then wants to gift her or both of you money for the building work then he can.

Pixie5740

Doing it the way you propose won't mean you pay SDLT twice. You will pay SDLT once when you purchase the property from your girlfriend's father. He will pay SDLT when he buys the property and if he already owns his home he will pay the higher rate of SDLT. A needlessly complicated plan all round really.

Lils37

We don't have the funds to buy the property right now, hence doing it this way round - we've found somewhere we don't want to miss out on.

saajan_12

Lils37 wrote: »

My girlfriend and I are in the process of buying a new home. In the first instance her father will be buying the property outright and putting it in our name, he is also paying for building works on the property. We will then take a mortgage out to buy the property off him.

Why can't you buy directly rather than the father getting involved? I'm guessing either because
a. property is currently unmortgageable e.g. not habitable/no kitchen / no running water?
b. lender won't allow you do make the changes / rebuild so much of the house

If father has the cash to purchase outright, can you set up a private mortgage with him. i.e. you buy directly in your name, with father contributing the balance above your deposit. Father puts a charge on the property and you pay him back monthly instead of paying a mortgage. Not sure if this would solve the HTB criteria, but the savings in interest would more than offset the HTB benefit.

If a. or b. are not the case, why not just buy directly with a mortgage.

Pixie5740

Lils37 wrote: »

We don't have the funds to buy the property right now, hence doing it this way round - we've found somewhere we don't want to miss out on.

Then you either need to accept that you won't receive the HTB ISA bonus or wait until such time that you do have enough funds to purchase the property.

Would your girlfriend's father be willing to gift or lend his daughter the funds you require to complete the purchase using a mortgage with a view to repaying him (if it is a loan) when you remortgage further down the line?

han_nah95_2

Your kind of in the same position as I was.


My dad bought a property a few years ago to rent out until I was ready (I was too young to be put on the buy to let mortgage papers). I have since then been paying him back the deposit he put down and a few months ago I bought the property from him with a mortgage.


I had a help to buy ISA but I couldn't receive the bonus because he already had the deposit - however for the interest I was gaining it didn't matter too much.


I think you just need to decide which is more important to you - the bonus from the ISA or the house!