Claiming bonus from HTB ISA - How long does it take?

WLITC

Can someone elaborate on claim process for the government bonus element of a Help to Buy ISA.

Extract from the Nationwide (who I have the ISA with) website states :-

"The bonus must be claimed on your behalf by a solicitor or conveyancer before the completion date. The bonus needs to be included with the funds consolidated at the completion of the property transaction. The bonus can't be used for the deposit due at the exchange of contracts, to pay for solicitors, estate agent's fees or any other indirect costs associated with buying a home."

Now I am a first time buyer so I am a little clueless as to what is paid when. I had assumed all monies were transferred on completion, but above suggests some payment is made at exchange? Is that normally a % of the deposit? If as above paragraph states the bonus must form part of the funds on completion, I assume that means the bonus is paid out (who holds it?) in time for completion?

CarrieVS

Normally, you pay an "exchange deposit" of 10% of the purchase price at exchange - this can be a different amount if that's what you and your solicitor have agreed with the seller, but is normally 10%. This is held by your solicitor who will pay it over to the seller('s solicitor) in the event that you exchange and then fail to complete. You cannot use your HTB ISA bonus for this.

The remainder of the purchase price is then paid over to your solicitor before or at completion (and you will also need to pay their bill.) This may include:
- The rest of the money you had saved up (or gifted to you, etc.) for your "mortgage deposit,"
- The loan from your mortgage lender: paid directly from the lender to your solicitor,
- The proceeds from selling an existing property: paid from the buyer's solicitor to yours on completion, then straight on to your seller's solicitor. But obviously not relevant to an FTB,
- Your HTB ISA bonus: paid from the government to your solicitor,
- Anywhere else you're getting money from.

When you close your HTB ISA you should get a closing letter from your bank confirming that it was operated within the scheme rules (assuming that is the case.) Once you get this letter, you need to give a copy to your solicitor and they will claim the bonus. I have read different things in different places about how long this may take - you will need to set a completion date which allows for this, but your solicitor should advise on that.

WLITC

So if I have to pay 10% at exchange, then that's my full deposit as I only have 10%, so does that mean the bonus would just come to me at the end or would the solicitor suggest to the seller (who is a housing association as its Shared Ownership) that the deposit I pay at exchange is 10% less, the amount of the bonus?

Tiglet2

Solicitors normally like 10 working days between exchange and completion to allow them time to apply for the bonus once they have the closing statement from your HTB ISA. While the bonus can be claimed in less time than this, it is important to note that the bonus will be lost if it is not available in time for completion. The solicitor will usually advise you when to close the ISA but it is probably a good idea for you to remind them of this when you get nearer to exchange (after the solicitor has "reported" to you).

Once you close your HTB ISA, you are able to use the money saved in the ISA plus interest towards the deposit. The bonus itself cannot be used towards the deposit, because it won't be available until completion, so it will go towards the completion monies needed by the solicitor to complete the transaction.

CarrieVS

WLITC wrote: »

So if I have to pay 10% at exchange, then that's my full deposit as I only have 10%, so does that mean the bonus would just come to me at the end or would the solicitor suggest to the seller (who is a housing association as its Shared Ownership) that the deposit I pay at exchange is 10% less, the amount of the bonus?

How far along in the process of buying are you?

I don't believe you can just have the bonus paid over to you, since you're only allowed to have it if you use it towards a house. However, I'm not 100% sure that it's impossible to decide to pay a higher deposit than you were intending, with the result that your mortgage is more than is needed, and you would get the surplus from the mortgage back - you may be able to immediately overpay the mortgage by that amount.

I don't know for sure if that would be allowable, and I do not know if shared ownership adds any additional complications to it. I think the more normal way of managing it is to try to negotiate a smaller exchange deposit: but the seller doesn't have to agree to that.

If you already have a solicitor you should speak to them about your HTB ISA and ask how they advise dealing with the situation. If you aren't that far along yet, you should speak to your solicitor once you instruct one.

WLITC

Tiglet2 wrote: »

Solicitors normally like 10 working days between exchange and completion to allow them time to apply for the bonus once they have the closing statement from your HTB ISA. While the bonus can be claimed in less time than this, it is important to note that the bonus will be lost if it is not available in time for completion. The solicitor will usually advise you when to close the ISA but it is probably a good idea for you to remind them of this when you get nearer to exchange (after the solicitor has "reported" to you).

Once you close your HTB ISA, you are able to use the money saved in the ISA plus interest towards the deposit. The bonus itself cannot be used towards the deposit, because it won't be available until completion, so it will go towards the completion monies needed by the solicitor to complete the transaction.

CarrieVS wrote: »

How far along in the process of buying are you?

I don't believe you can just have the bonus paid over to you, since you're only allowed to have it if you use it towards a house. However, I'm not 100% sure that it's impossible to decide to pay a higher deposit than you were intending, with the result that your mortgage is more than is needed, and you would get the surplus from the mortgage back - you may be able to immediately overpay the mortgage by that amount.

I don't know for sure if that would be allowable, and I do not know if shared ownership adds any additional complications to it. I think the more normal way of managing it is to try to negotiate a smaller exchange deposit: but the seller doesn't have to agree to that.

If you already have a solicitor you should speak to them about your HTB ISA and ask how they advise dealing with the situation. If you aren't that far along yet, you should speak to your solicitor once you instruct one.

Thanks both, I have just instructed the solicitor today (only had official offer letter from housing association yesterday) and full mortgage application is going in tomorrow.
I have been given the name of my solicitor earlier today and it was suggested he'd send me a welcome email. I didn't get that today, but I have his contact info so I'll try and email him tomorrow to arrange a call. He specialises in Shared Ownership so I suspect he's dealt with similar similar cases (10% deposit, HTB ISA) before as he specialises in Shared Ownership too.

diggingdude

Isn't there a H2B ISA fast track claim process for your solicitor to use if needed? I'm sure it will be quicker than a Skipton LISA. 13 days and waiting for that money so far

WLITC

diggingdude wrote: »

Isn't there a H2B ISA fast track claim process for your solicitor to use if needed? I'm sure it will be quicker than a Skipton LISA. 13 days and waiting for that money so far

Thanks for the tip, I will ask the solicitor. Also just googled H2B ISA fast track but didn't find anything, but stumble upon this article on https://www.which.co.uk/news/2016/08/help-to-buy-isa-how-the-bonus-payment-really-works-451594/ which (no pun intended) suggests that I can likely agree to only pay say 5% at exchange and then using my ISA bonus, saving, mortgage funds at completion.

rescynic

our solicitor has said it will take them 10-14 days to claim the bonus, basically you go into the bank close the h2b isa and get a closing statement, give that to the solicitor and they do the rest (make sure and ask them for a first time buyer declaration form and hand that over with your closing statement)

from what our solicitor (and the other posters have said) the bonus is then added to your deposit pot so when your asked to transfer over the deposit to them this is already taken into account.

diggingdude

I think it was called the expedited urgent bonus request.

M2808

With my solicitor I said from the beginning I will not have 10% as the bonus will make up part of that which was fine.
I exchanged on Tuesday and completed on Friday so didn't take long for it to be applied for.
If I pulled out between exchange and completion I would have been liable to pay the rest of the deposit - but I knew I wouldn't do that.