» »

Help to Buy ISA without taking a mortgage?

New Post Advanced Search

Coronavirus: The latest from MSE


The MSE team is working extremely hard to keep the info we have about your travel rights, cancellation rights, sick pay (and more) up to date.
The official MSE guides: NEW MSE Coronavirus Guides

NEWSFLASH 31/3
RESCUE FLIGHTS FOR STRANDED BRITS * SCHOOL MEALS VOUCHERS * BRIGHTHOUSE COLLAPSES

Help to Buy ISA without taking a mortgage?

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
5 replies 219 views
Aril85Aril85 Forumite
2 posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Hi all, I am really struggling to find any information if you can get a 25% government support under the Help yo Buy ISA scheme without taking a mortgage? Is this option available for people who wants to purchase a council property with cash? Thank you

Replies

  • eskbankereskbanker Forumite
    13K posts
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    ✭✭✭✭✭
    https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#b39a24ea-e1f7-648f-8ce9-ff0000ad17aa:
    Can I buy a property without a mortgage and be eligible for a government bonus?

    No. The property you are buying must be mortgaged in order to be eligible for the government bonus.
  • Aril85Aril85 Forumite
    2 posts
    Thank you. Much appreciated
  • edited 9 February at 4:16AM
    MARTYM8`MARTYM8` Forumite
    1.2K posts
    Seventh Anniversary 1,000 Posts
    ✭✭✭
    edited 9 February at 4:16AM
    What is the point of a government backed scheme to 'help' first time buyers if the bankers don't get their cut!
    You could buy a £30k flat for cash in the north east - with an inheritance - but not qualify for a bonus even if on minimum wage - a bonus that could help pay for your furniture and white goods. But earn £100k and take out a £420k mortgage in London you will. Who really needs the most help?
    Lets never forget who the government are really trying to help - as how you pay for the home should be irrelevant from the government's and the taxpayer's perspective. The only criteria is you should be a first time buyer buying a home below the thresholds!
  • edited 9 February at 12:09PM
    bowlhead99bowlhead99 Forumite
    10.5K posts
    Part of the Furniture 10,000 Posts Name Dropper Post of the Month
    ✭✭✭✭✭
    edited 9 February at 12:09PM
    MARTYM8` said:
     How you pay for the home should be irrelevant from the government's and the taxpayer's perspective. The only criteria is you should be a first time buyer buying a home below the thresholds!
    I call BS, because it's perfectly valid for a policy of providing financial support to help people buy a roof over their heads to have the criteria:

     "we are not going to give you money towards buying a property if you already own a property, or have owned one before and got rid of it, or it's an expensive property above the thresholds, or you already have enough money to buy the property outright with the funds that you and your friends/family are putting in."

    It is a crude means-test, but one which is quick and practical to administer so each transaction will not be subject to delay within the claims process which could screw up a chain of transactions.

    - So yes, if someone has a high salary but not enough money in the bank to buy the property they want (subject to threshold on property value) so they are borrowing tens of thousands on a mortgage , then they can get the fHelp to Buy ISA bonus funding (which due to the limit on bonus size will generally only cover 1-10% of the mortgage they were going to get). 

    - Whereas if someone has a pile of inherited money that's sufficient to buy a property free and clear of debt, they don't need a hHelp to Buy ISA handout to buy the property. 

    You mention the example of someone being on minimum wage and finding themselves with enough money inherited to buy their council flat. Under Right to Buy, even though they have tens of thousands of inheritance, the government will give them a big percentage discount on the market value (funded by general taxation) to help them buy the property for tens of thousands less than it would have cost them on the open market (minimum 35%).  And their low income may continue to entitle them to benefits once they have spent the inherited cash on the property.  So, that seems a decent amount of assistance for someone who is already able to complete the transaction without a mortgage, so my vote is not to give them a 'help to buy' ISA bonus.  My taxes have already funded them getting a 35% discount on the property and they have enough in the bank to pay for it in full!
  • grumiofoundationgrumiofoundation Forumite
    236 posts
    100 Posts
    ✭✭
    MARTYM8` said:
    What is the point of a government backed scheme to 'help' first time buyers if the bankers don't get their cut!
    You could buy a £30k flat for cash in the north east - with an inheritance - but not qualify for a bonus even if on minimum wage - a bonus that could help pay for your furniture and white goods. But earn £100k and take out a £420k mortgage in London you will. Who really needs the most help?
    Lets never forget who the government are really trying to help - as how you pay for the home should be irrelevant from the government's and the taxpayer's perspective. The only criteria is you should be a first time buyer buying a home below the thresholds!
    You could buy a 30k flat with a small 5-10k mortgage (100-200 interest per year @ 2%), get your HTB bonus and then use the cash to buy white goods etc. 

    If you take out a 420k mortgage (93.3% mortgage on 450k property) you will be paying £8148 in interest every year (1.94% interest). So the max. 3000 bonus will not make a HUGE amount of difference to that person (<3% of total cost of property over a 25 year mortgage) whereas in the first example is potentially a 10% discount to the total price of the property.
Sign In or Register to comment.

Quick links

Essential Money | Who & Where are you? | Work & Benefits | Household and travel | Shopping & Freebies | About MSE | The MoneySavers Arms | Covid-19 & Coronavirus Support