Are HTB ISAs worth it?

MissMarble

Hi everyone,

I'm in the process of buying a house (already exchanged, complete next week!) and my solicitor has asked me to send a closing statement for my HTB ISA. I set this up last year and have added each month to it and received a good interest top up.

However, now we have exchanged I'm wondering whether it would be useful to use the HTB ISA money for it's intended purpose or whether it would be better to use the money to help with refurbishment of the house.

As I set it up a while ago, I'm struggling to remember what the benefits of it are aside from the government bonus - what would it actually do to my mortgage payments?

Has anyone used it and seen any benefits or not used it and used the money for other things (i.e. house renovation)?

Thank you!

wjr4

You won't get the bonus if you use it towards house renovation.

MissMarble

wjr4 wrote: »

You won't get the bonus if you use it towards house renovation.

Thank you for your reply - yes I understand I won't get the bonus, I'm just a bit confused about the point of a HTB and how it will be beneficial to my mortgage in the long run?

marliepanda

MissMarble wrote: »

Thank you for your reply - yes I understand I won't get the bonus, I'm just a bit confused about the point of a HTB and how it will be beneficial to my mortgage in the long run?

Errrrm. What is the problem?

Its not 'beneficial' to your mortgage other than it makes it lower, and therefore payments should be lower.

Its simply a boost to the deposit. I don't understand where the confusion is.

If you don't want the bonus money, then withdraw it and use it for whatever you want, new car, jacuzzi bath, mcdonalds brekkie...

thermal2844

It is free money towards the purchase price of your house, what's not to like?

Norman_Castle

MissMarble wrote: »

I'm just a bit confused about the point of a HTB and how it will be beneficial to my mortgage in the long run?

The 25% bonus is money you will not have to pay into your mortgage. Take the bonus and fund the renovations separately.


Have you worked out how much your 25% bonus is?

mangog

It's free money! Claim the bonus and you'll have more money for the renovation work.

For example, say you have £15k in account A and £5k in your HTB ISA. Your deposit is £15k.

If you use just the money in account A - the full £15k - you have £5k for renovations left in the HTB ISA.

If you use a combination of the Account A and the HTB ISA, the government will give you 25% of your HTB ISA total - meaning you effectively have £6250 to use towards your deposit. This means you only need to take £8750 from account A to make up the £15k deposit, leaving you with £6250 in account A for renovations.

diggingdude

Its not hard, free money. Are you sure you are not getting confused by the help to buy equity scheme?

MissMarble

Hi everyone,

Thank you for your replies - to give a bit more of a background:

- I've saved around £3,800 in the HTB ISA account
- My government bonus would be £950

I worked it out that if we used the £3,800 over the course of our mortgage it wouldn't be that much off each month - is that correct?

While the £950 would be a great bonus to have, I just feel that the £3,800 would take us a lot longer to save up again for and could be used to help things like a potential re-wire/plastering etc.

I called my bank yesterday to see if they could help and there just seems to be so much confusion as to how it can be used.

I need to make a decision today about what to do with the HTB ISA and to say I'm confused is a bit of an understatement! Maybe it's just the whole house buying process stress which is starting to catch-up with me. Thank you for the help!

CarbonImage

Presumably you are using money from another account to make up the deposit?

Say for argument's sake you need exactly £3800 for repairs. Just keep £3800 of the deposit money back for this, and use the £3800 that's in your HTB ISA. That way you get £950 free.

You probably should have made this decision earlier in the process to be honest, but either way I would not be turning down a free £950, regardless of whether it was against my mortgage or otherwise!

MissMarble

CarbonImage wrote: »

Presumably you are using money from another account to make up the deposit?

Say for argument's sake you need exactly £3800 for repairs. Just keep £3800 of the deposit money back for this, and use the £3800 that's in your HTB ISA. That way you get £950 free.

You probably should have made this decision earlier in the process to be honest, but either way I would not be turning down a free £950, regardless of whether it was against my mortgage or otherwise!

Hello, thank you for your reply. We've already exchanged and so the deposit came from other money we had saved. We do have some money left over from our deposit fund, however we are hoping to save the rest for furniture/more work and general back-up money. I've tried to speak with my solicitor but haven't had much luck as to what would be best to do and I've been passed through various people at the bank with the HTB queries. So the £3,800 would come off our mortgage payments essentially over the next 25 years?

Thank you again.