Help to Buy ISA Interest Pay Out

Berkshire_Taff

My son has a Halifax Help to Buy ISA that we have been contributing to over the last 4 years. The lucky boy has very fortunately come into a reasonably large inheritance which means that he will possibly/probably buy a house or flat that exceeds the £250K limit (£450K London) and therefore wouldn't be eligible for the 25% government bonus towards his property purchase. My question is - will the Halifax still pay him the full interest that he has accrued since we kicked off the ISA or is there an interest 'penalty' applied if you don't use the funds towards a house purchase? Need to decide whether to continue investing in the ISA or not.

Thank you

eskbanker

Interest is payable (on daily balances up to closure date) regardless of what the money is eventually used for, with no penalties - the account does need to be closed once he's bought a property though.

george4064

As eskbanker said, once your son has completed on the property he should close the account down immediately. There is no penalty to doing this, other than forgoing the extra 25% bonus which you/your son is aware of anyway given the situation.

oli356

Side question on this as the OP seems to be answered ...what stops someone continuing to pay into a HTB ISA [because the interest rate is better than most] after they have purchased a house (and not used the 25% bonus)? I assume its just against some T&S?

george4064

oli356 wrote: »

Side question on this as the OP seems to be answered ...what stops someone continuing to pay into a HTB ISA [because the interest rate is better than most] after they have purchased a house (and not used the 25% bonus)? I assume its just against some T&S?

I don't think there are any checks, but is it worth the risk of a potential fine/whatever punishment HMRC can dish out just for a bit of extra interest?

oli356

george4064 wrote: »

I don't think there are any checks, but is it worth the risk of a potential fine/whatever punishment HMRC can dish out just for a bit of extra interest?

No, and I wasn't suggesting I was planning to just I tried to actually find an answer of what you should do if you don't use the bonus, but couldn't.

stehouk

Why would HMRC impose a fine if the bonus is never claimed ?

I have been reading the Santander t&c's and cannot find where it states you have to close the account if you buy a property but do not claim the bonus.

Maybe iv'e missed it, i know we wouldn't be eligible to claim the bonus but keeping it as a savings account is tempting at 4.25%.

tunde10

stehouk wrote: »

Why would HMRC impose a fine if the bonus is never claimed ?

I have been reading the Santander t&c's and cannot find where it states you have to close the account if you buy a property but do not claim the bonus.

Maybe iv'e missed it, i know we wouldn't be eligible to claim the bonus but keeping it as a savings account is tempting at 4.25%.

Your help to buy ISA is still getting 4.25% interest? I remember these rates were common when the product was first introduced but they all dropped their rates over the years.

The highest i could find last year before Help to Buy was closed was 2.5%. Mine is 2.25% from Halifax now but still very good with £11,700 in it.

I managed to get an Housing Association property after 8 years on waiting list so it is now unlikely i will be buying a property in the next 3 years as planned so i am going to open a LISA. But keep Help to Buy open whilst the rate is almost double easy access account. I will close this after this drops (expecting this at some point this year) and my LISA bonus overtakes Help to Buy.

eskbanker

oli356 wrote: »

No, and I wasn't suggesting I was planning to just I tried to actually find an answer of what you should do if you don't use the bonus, but couldn't.

stehouk wrote: »

Why would HMRC impose a fine if the bonus is never claimed ?

I have been reading the Santander t&c's and cannot find where it states you have to close the account if you buy a property but do not claim the bonus.

Maybe iv'e missed it, i know we wouldn't be eligible to claim the bonus but keeping it as a savings account is tempting at 4.25%.

I don't know what's in Santander's HTB ISA Ts & Cs (they don't seem to be readily accessible online) but the definitive scheme rules are published at https://www.helptobuy.gov.uk/documents/2015/12/scheme-rules.pdf/, including the obligation to advise of any significant changes:

8.11 Help to Buy: ISA Holders – truthful and accurate information

Each Help to Buy: ISA Holder shall:

(A) ensure that each statement, form, declaration, confirmation or any information provided by them to an Eligible ISA Manager, an Eligible Conveyancer or to the Administrator under or in connection with the Scheme Rules, including, but not limited to, the First Time Buyer Declaration or the Eligible Customer Declaration, is truthful and accurate in all material respects, and not misleading in any material respect; and

(B) take steps to correct any statement, form, declaration, confirmation or any information provided by them under or in connection with the Scheme Rules, which is untruthful, incorrect or misleading in any material respect.

The Eligible Customer Declaration includes confirming that you've been given access to these rules and that you "agree to be bound from the date of this agreement as an Eligible Customer by the Scheme Rules", where Eligible Customer includes "are not, and never have been, a Residential Property Owner", so once you cease to be an Eligible Customer, by virtue of buying (or inheriting, etc) a property, then the holder is obliged to declare this and/or close the account (ultimately the same thing).

afis1904

The Barclays ISA declaration says that you're only eligible for the account if you've never owned property

ConsistentlyLost

Hello all! New to the forum here.
I wasn't sure whether to start a new thread or post my question here but here goes.
When someone has reached the £12000 after having deposited £200 every month since opening their help to buy isa, can they deposit more than £200 a month thereafter?

Thank you in advance!