Help to buy Isa and where the bonus goes

Joniemaximus

Sorry for the long post but i'll try and be thorough,

Myself and my wife are looking to buy our first home and during a meeting with the mortgage advisor he outlined how he believed our Help to Buy ISA works but i'm not sure that's correct. How he understood it to work is;

We use the 10% deposit we’ve saved (which will increase above that by the time we complete). Upon completion we close the ISA and get a letter from the bank saying this, we sign a document to confirm we’re first time buyers and the solicitor applies for the bonus (25%).

His understanding is the solicitors use this money to cover your fees only claiming for the bonus to the value of those fees, but all the documentation I’ve read says this value has to go to the sale of the house meaning or deposit would be 12.5% and then we’d pay the fees separately.

The other way I see it could work is we close the account take the deposit from the ISA calculate the deposit we’d need with the bonus (e.g. 200k house, £20k deposit made up of £16000 ISA and £4000 bonus) leaving £4000 in an account we moved the cash from the ISA to, we then use this money to pay your fees?

Or do the solicitors simply claim all of the bonus and return the difference on completion minus their fees? the way the mortgage broker explained it the solicitor would not claim the entire bonus as fees and the remainder would be 'lost' somewhere, or they'd manage to claim the entire bonus but claim it as fees which could total thousands more than they'd be due?

Exodi

I've actually just redeemed a HTB ISA so I can let you know. If I'm frank though, I have absolutely no idea what you're talking about (or what you're broker is talking about if this is his advice) regarding fees and the like...

Joniemaximus wrote: »

Or do the solicitors simply claim all of the bonus and return the difference on completion minus their fees?

It works mostly like that, you would close your HTB ISA, the non-bonus moneys would be transferred to another of your accounts and provide the closure statement to your solicitor before completion to claim the bonus. All of your deposit monies, mortgage, help to buy bonus, etc goes into a big pot - the solicitor would have provided a completion statement prior to completion which will detail what you will need to have in this to complete. On completion day, they pay the seller, they take their fees out and then give you whatever's left. There's no chance of 'losing the bonus'

whatdoyouthink...

You need to close the ISA before completion and get the closing statement to your solicitor.

For my ISA, once I closed it and gave the closing statement to my solicitor, they applied for the bonus and before completion when they sent us their statement which included all their fees, deposit etc, the HTB ISA bonus was on there and it was deducted from the total we owed.

katieort

Agreed with previous replies, as I just did the same last month.
Closed my H2B Isa about a week before exchange/completion (was done same day)
Sent the closed acccount letter with amount of money i had saved to my solicitor who then did her thing with it to get the bonus. The saved money went into my normal account.
A few days later my solicitor said it had been approved and sent me a completion statement which showed all of the money i had paid, including the bonus and mortgage etc and what was left to pay, ie the 10% deposit and solicitors fees.
I then sent the solicitors this money over and then we were all done!

My 10% deposit included money from the H2B so if that's what you wanted to do, then that is fine. Mine was about 8% savings and 2% H2B money plus solicitors fees on top of that which we saved separately.
So i sent the solicitors the 8% deposit i had saved, and solicitors fees, as they already had the other 2% from H2B.

Hope this makes sense for you!

Joniemaximus

Thank you all for your help, and experiences. We have 2 separate HTB ISAs as we're both 1st time buyers so we'd transfer both of those to the solicitor a week or so before completion they'd claim the bonus as we've all described but the money in the 'pot' would be more that they'd need to cover the fees so i'm assuming they'd return the difference.

Exodi

Joniemaximus wrote: »

Thank you all for your help, and experiences. We have 2 separate HTB ISAs as we're both 1st time buyers so we'd transfer both of those to the solicitor a week or so before completion they'd claim the bonus as we've all described but the money in the 'pot' would be more that they'd need to cover the fees so i'm assuming they'd return the difference.

Correct, and of course they'd return the difference - it's pretty commonplace to send (much) more than is needed.

Joniemaximus

Thank you, that's another thing i've managed to get my head around.