Mortgage Rates and Help to Buy ISA

chaz411989

Hi all,

So I've hit a pot hole on my journey to buying my first house. Hopefully it's not a major obstacle and just need to get clarification.

If I'm looking to buy a property that costs £200,000 and I see a mortgage rate of say 2.25% (multi-year fixed) that requires a minimum 20% deposit, am I allowed to count the government bonus as part of the 20% deposit?

With my savings accounts, say I have £38.5k to put towards a deposit (plus a contingency fund for lawyer fees, surveys, searches, remodelling costs, etc. but let's assume I don't want to touch that money for the deposit) but £6k of the £38.5k is in a help to buy ISA and I need the government 25% bonus to get it to the £40k. Will I be eligible for that rate, or will I be eligible for the rate that comes with an 80.75% LTV mortgage?

If it doesn't count towards the initial deposit, I'm really not sure how the help to buy works... do I have to have the £40k deposit available in my bank account and then I only have to take a mortgage for £158,500 with the government supplying the other £1500? Would this LTV (as considered by the bank) be 80% or 79.25%?

I really don't want to be paying an uncompetitive mortgage rate! given I'm so close to the 80% LTV threshold!

Any help on this would be appreciated.

Thanks

Charlie

YHM

The HTB ISA Bonus can be included as part of your deposit fund....thats what its intended for

alex_163163

Yes so it can be included towards your mortgage deposit.
What it can’t be included towards is your exchange deposit. This is typically 10% of the purchase price that is passed to your vendors solicitors on exchange day. As you are putting down 20% mortgage deposit you have these funds available for exchange without needing the inclusion of the HTB iSA bonus at this time.
People seem to confuse the meaning of deposit - there is the exchange deposit which is basically the amount ‘securing’ the sales with the vendors, and then there’s the mortgage deposit which determines LTV etc.

juniordoc

As above you can use it, but if you haven't found a house you want to buy yet, that the process of finding and purchasing one takes so long that you can probably save up the difference in the interim anyway.
Good luck and well done on saving a decent deposit!