first time buyer ISA bonus question

ducksbubbles

Hi there

sorry I couldn't find an answer by searching but I expect this has already been asked.

We're in the process of buying a property, both of us qualify for an have the help to buy isa's.

We're a little confused as to how the bonus can be claimed as we're expected to come up with the 10% for the exchange deposit which we need to give to our solicitor (which we can just without the bonus but this leaves us with no money for fees etc) and then the bonus gets paid on completion... and can ONLY be used towards the mortgage deposit (which is 10%). So what happens to the original money we put down, do we get the money back that we've 'overpaid' in lieu of the mortgage deposit or is that theoretically tied to the mortgage.

We have an appointment with our solictitor on Monday to sign some paperwork and talk through things but I don't think I can worry about this for a week, especially as I'm hoping it's a lot more straightforward than it seems

Many thanks in advance

Katapolt

From my experience (i've literally just done this myself):
-We have closed our HTB ISA as this needs to be done before completion, and we are using the funds in it (without the bonus) to pay for the deposit.
- We have to pay all fees and deposit ourselves in full now in order to exchange
- After completion we will get the bonus back from our solicitor. we can then use this on what we like.

whatdoyouthink...

My partner and I have just completed and both used a help to buy isa, we gave our closing statements to our solicitor so they could claim the bonuses. When we received the statement from our solicitor detailing what we needed to pay them (their fees, our deposit, search costs, etc etc....etc) the isa bonuses had been deducted from the total we owed.

clairesilverspar

The solicitor will negotiate the exchange deposit to be the 10% less your total bonus amount. They will apply for the bonus, which is received on completion, and paid to complete the 10% deposit.
The bonus cannot be used for solicitor fees etc. your solicitor will explain everything, and you will need to provide the closing statements in advance of exchange.


Eg. Buying a house for 100k. Deposit of 10k. Your H2B ISA has 8k, meaning you are eligible for a 2k bonus.
You will pay 8k on exchange, with the remaining 2k to be paid on completion (by solicitor)on receipt of the bonus - you never actually receive the money).


As an aside, if after exchange you fail to complete you would still be liable to pay that extra 2k, even if the bonus did not come through due to failure to complete.

ducksbubbles

thank you so much everyone, it seems so baffling, but I feel reassured now

Katapolt

clairesilverspar wrote: »

The solicitor will negotiate the exchange deposit to be the 10% less your total bonus amount. They will apply for the bonus, which is received on completion, and paid to complete the 10% deposit.
The bonus cannot be used for solicitor fees etc. your solicitor will explain everything, and you will need to provide the closing statements in advance of exchange.

This is confusing, as im getting my bonus back in a bank transfer after completion, as everything else has already been paid upfront.

marliepanda

Everyones solicitors seem to be doing it differently.

Mine, basically said I needed X amount in their bank account on my completion day.

That was their fees PLUS stamp duty PLUS my deposit MINUS the bonus they knew I was getting based on the closing statement provided.

There was no clear delineation of what the bonus actually went on, it was simply put into a pot of money the solicitor asked for.

Maybe mine was different as we did a 20% deposit so could do 10% at exchange plus the rest on completion day.

CommitedToChange

Katapolt wrote: »

This is confusing, as im getting my bonus back in a bank transfer after completion, as everything else has already been paid upfront.

Technically you're getting an over-payment back - not the bonus as you can't have the bonus as cash. Like me you're paying the sols the full amount before completion so if there is an issue with the bonus you can still complete. The bonus will be used for the deposit as it will be received before completion.

Its just because of the stupid way the government set up the system. Don't worry - your sol knows how to make it work.

CommitedToChange

Op - I find this comment worrying

"which we can just without the bonus but this leaves us with no money for fees etc"

This seems to imply you are buying without leaving yourself any savings for afterwards - what happens if your boiler breaks down or your fees increase? (my fees increased as my lender wanted a few extra searches).