Help 2 Buy ISA Bonus

Chickenman1108

Hi
Thanks to everyone that helped me with my last question. Its much appreciated. I have one other question about our H2B ISA top-up.
We are looking to purchase a new build flat soon. The flats are due to be released off-plan in September of this year, but wont be completed until around February 2018. We both have H2B ISAs which we will be using for a deposit. We will also be using the H2B equity loan scheme.
The developers have said that we would need to pay 10% within 28 days of putting down a reservation fee. Apparently, as they are using H2B, they will accept 5% (as this is the amount of deposit that we will have).
My question is though, if we have to pay that 5% when we exchange, does that mean our H2B ISAs will actually be closed at that stage? So therefore the bonus that we receive on our ISAs will only be based on what we actually have in our ISAs up until September? We each pay the full allowance of £200 into our ISAs each month. Obviously if we were to continue saving into our ISAs until the actual date of completion (which is 5 months after paying our reservation fee) that'd be a further £2000 (combined), which would mean a further £500 in bonus money. So we are effectively forfeiting that extra £500 bonus if our ISAs are closed 5 months prior to completion. Is this correct?
I hope that makes sense??
Thanks in advance for any advice
Dan

vapourA

I am not a solicitor or conveyancing person but my understanding is that the ISA is closed for completion, not exchange. Often they are closed around the time of exchange as completion is usually a short time afterwards but solicitors need a few days to clam the bonus so they recommend closing them a week or two before completion. So I think you can continue to save and earn the extra bonus. Check with your conveyancing firm though. The bank will likely be clueless in my experience!

da_rule

Yes that is correct. If you cannot finance the 5% through some other means you'd have to close the ISA account obtaining the closing letter/statement for the bonus element to pay the deposit. Obviously once you've closed it you cannot contribute any more money or open another one.

vapourA

You cannot use it for the deposit unless the rules recently changed

da_rule

vapourA wrote: »

You cannot use it for the deposit unless the rules recently changed

You cannot normally use the bonus as part of the exchange deposit. You can however use the capital as the exchange deposit (or part thereof).

vapourA

Ah yes you are right :beer:

kingstreet

Conveyancer_South_East wrote: »

You cannot claim the HTB ISA bonus until completion and it can only be used towards the purchase price - it cannot be used for fees or stamp duty.

I do not deal with HTB equity loans but my understanding is that you cannot have both a HTB equity loan and HTB ISA.

You'll find many people are seeing their bonus going into the completion funds pool and this isn't being earmarked for anything specific, especially when the only deposit being paid was paid ahead of exchange.

The rules state the bonus can't be used for anything else, but in reality it is.

I do HTB Equity Loan business and yes, it is completely acceptable to us an HTB ISA as part of the 5% deposit.

One of the lengthier threads on the subject;-

https://forums.moneysavingexpert.com/discussion/5582683

Welcome on board, by the way!