Help!!! Help to buy ISA bonus claim

eskbanker

danielhopps wrote: »

we just want to know exactly where this money goes because we've been told we get all that money back after completion to spend on what ever we won't but our solicitor is saying we won't receive any money back and that's put towards 'completion monies'?

Don't know who told you otherwise but they were wrong and your solicitor is right - s/he applies for the bonus for you and applies all of it to the purchase cost of the property (not fees, etc), so you don't get any of it back after completion.

https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#f79a24ea-e1f7-648f-8ce9-ff0000ad17aa:

Your conveyancer will apply for your government bonus on your behalf. The bonus will be sent to your conveyancer or solicitor to be included with the other funds which have been consolidated for the completion of the property transaction.

danielhopps

So in that case, where does the bonus money go too?

and I've spoken to people already in this situation and they, themselves have told me that after completion had some money left over and the solicitor sent them a cheque with what ever money was left over from the bonus?

masonic

danielhopps wrote: »

we haven't exchange contracts or anything yet, but we've got £14000 deposit for the house we wish to use for the mortgage, our house is valued at £205995, we've had to use the help to buy scheme of 20%, so taking that away with our deposit we've got a mortgage of £150796, we've budgeted to pay the solicitor fees off ourselves and any other fees will be paid by ourself as well from savings etc.

As above, the solicitor is correct, the bonus must be part of the mortgage deposit and therefore becomes part of the funds used to pay for the property, but you are under no obligation to put any of your other funds towards the mortgage deposit, beyond those funds actually required for the purchase. Even if you wanted to just put down a 5% deposit, the £3,500 you are due in Government bonus money won't cover it, so at least some of your £14,000 would be needed for the deposit.

masonic

danielhopps wrote: »

So in that case, where does the bonus money go too?

It goes towards the property purchase. It's called a Help To Buy ISA for a reason, the bonus is used to Help people Buy a property.

and I've spoken to people already in this situation and they, themselves have told me that after completion had some money left over and the solicitor sent them a cheque with what ever money was left over from the bonus?

Very likely it was the return of some of their own savings because they overpaid when sending across their part of the deposit.

eskbanker

The conditions for using the bonus money are specified in the scheme rules, under which your solicitor must formally declare to HMRC that "the entire amount of the Bonus along with any accrued interest will be applied towards the acquisition of the property", both before claiming the bonus (clause 7.6(A)(v)(a)) and then after completion (7.8(A)(ii)).

Anecdotally, there have been reports of solicitors who are prepared to bend/break these rules by mixing the bonus money up with all the other money needed around the time (fees, duties, etc) but, apart from the risks inherent with doing this, if yours is telling you that it'll be done by the book then you don't have much choice other than to abide by the rules!

danielhopps

Sorry to be so thick, just so much info to understand.

when you say it goes to the property purchase, does that mean the bonus money will get knocked off the purchase price of the property which should then alter the mortgage we've got out on it or something else?

really appreciate the feedback.

kind regards

Daniel

masonic

danielhopps wrote: »

when you say it goes to the property purchase, does that mean the bonus money will get knocked off the purchase price of the property which should then alter the mortgage we've got out on it or something else?

When you buy a house, then the money generally comes from two sources:
1) Your own savings (the mortgage deposit)
2) Money lent to you by the bank (the mortgage)

When you buy a house using a HTB ISA, then there is a third source:
3) The Government bonus

You must use all of (3) towards the purchase, meaning you will need less of (1) and/or (2). The total price you pay stays the same. Your mortgage provider will require (1)+(3) to be a certain minimum amount (e.g. 5% of the purchase price to give a 95% LTV mortgage), but within that limit you are free to adjust (1) so you have more money in your pocket rather than a smaller mortgage

danielhopps

so if we instead changed our deposit from £14k to £11k and used the bonus money, taking the whole deposit to £14k again, the total price for everything will be the same? and then we'll have £3000 from our own savings to spend on whatever we want?

if you get what I mean?

masonic

danielhopps wrote: »

so if we instead changed our deposit from £14k to £11k and used the bonus money, taking the whole deposit to £14k again, the total price for everything will be the same? and then we'll have £3000 from our own savings to spend on whatever we want?

if you get what I mean?

Yes, that is within the scheme rules. Provided that the money the bank has lent you, plus the Government bonus, plus the money you contribute from your savings is enough to buy the house, then that's fine. You will be able to confirm with your solicitor in due course exactly how much money they need from you.

danielhopps

that's absolutely perfect, I really appreciate your time, knowledge and help.

thank you so much once again

kind regards

Daniel