Help to Buy - Barclays says no to deposit

Dalglish

My teenage son has opened a Barclays Help to Buy ISA and has been told by the Barclays customer advisor who did his paperwork that the 25% bonus that the state would contribute could ONLY be used towards conveyancing costs, not towards the deposit on the house.
MSE’s guide states: It doesn't need to be your sole deposit money, you can combine it with other savings (see where to save the rest).
Who’s right and who’s wrong?
In his Barclay’s Agreement for this newly opened account, I can find no reference to 25% bonus and wonder if the customer advisors is mistaken?
Many thanks

Flobberchops

The advisor is correct. From the official HTB ISA section on the government website:

"when you are close to buying your first home, you will need to instruct your solicitor or conveyancer to apply for your government bonus. Once they receive the government bonus, it will be added to the money you are putting towards your first home. The bonus must be included with the funds consolidated at the completion of the property transaction. The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home." (Emphasis mine)

Source: https://www.helptobuy.gov.uk/help-to-buy-isa/how-does-it-work/

It's still an account worth paying the monthly maximum into, in my opinion, as it has a decent rate of interest and the government bonus still isn't to be sniffed at, even if it's "only" redeemed against the completion stage instead of counting toward the deposit. And even then, that's more money he can be earmarking for the deposit rather than keeping aside for fees, so a penny saved... right?

Dalglish

Perfectly explained thank you. Absolutely yes!

eskbanker

Dalglish wrote: »

My teenage son has opened a Barclays Help to Buy ISA and has been told by the Barclays customer advisor who did his paperwork that the 25% bonus that the state would contribute could ONLY be used towards conveyancing costs, not towards the deposit on the house.

Flobberchops wrote: »

The advisor is correct.

Only partly! It is indeed true that the HTB ISA bonus can't be used towards the deposit due at exchange of contracts, but it can't be used for conveyancing costs either, as stated in the gov.uk text you quoted (with my emphasis this time!):

The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home.

MSE explains the distinction between exchange deposit and mortgage deposit (and how the HTB bonus can only apply to the latter) at https://www.moneysavingexpert.com/savings/help-to-buy-ISA/#tip10

Barclays have form for atrocious advice on HTB ISAs, as seen on the numerous previous threads about their advisors' complete inability to grasp the concepts, perhaps their internal training is deficient....