Help to buy isa bonus

Sncjw

I am mega confused as I’m getting different answers from all over. In regards to the bonus it is paid on completion and it states that you use it towards buying first home. How can you use it when you don’t get it until completion. 

I’ve talked to nationwide via chat and it doesn’t make sense as you pay the deposit before completion. 

We have w deposit of 10% of the cost of the house in savings without the bonus funds. This is what they said 

So the money that you have saved in the account is meant to be used for the deposit.  At the same time, the solicitor requests the Bonus money for you on your behalf (you never see it) and then adds that bonus to the deposit pot too.  Its up to you at that stage if you want to reduce your contribution of savings to take into account the addition of the Bonus, or use all savings + Bonus for aa larger deposit

Towards or at Exchange of Contracts is when the solicitor starts to gather the funds, this includes the deposit monies from you, and any bonus amount that you are eligible for.  By that time, they also have a good idea of what date they are aiming for completion, so will also write to Nationwide requesting the mortgage money for X date

Receive bonus: 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.

So it’s contradicting what the agent is saying that you can’t use it towards deposit. So what do you use it for the 

jimbo2108

You need the full deposit in the help to buy ISA. I got the bonus to cover the fees then got a rebate of anything elft over. I was paying a 5% deposit which I had, then the bonus was used to cover solicitor fees and then got a rebate after.

Tiglet2

You will need to pay the 10% deposit in time for exchange, which does NOT include the HTB ISA Bonus (or 5% if you are buying a new build with HTB). 
You can close your HTB ISA at this point and once you have provided the closing statement to your solicitor, they will apply for the bonus.

However you will need to pay all monies owed to your solicitor in time for completion.  Other monies needed will include the solicitors' fees for the conveyancing work, the Land Registry fee, any additional fees, e.g. Notice Fees or a Deed of Covenant.  So, the day before completion the solicitor will need all monies to be in their Client Account to cover the total amount needed to complete the transaction.  This will include any monies coming in from your mortgage lender and the bonus from HTB.  The solicitor will provide you with a Final Account showing all monies flowing in and out.  Any overpayment will be refunded to you.  The bonus is credited to the account as part of the monies needed to complete the transaction - just means you transfer slightly less.

Tiglet2

If you are simultaneously exchanging and completing on the same day, you will need to close your HTB ISA prior to exchange, otherwise the bonus will be lost if it cannot be claimed in time.  You would also need to transfer all the monies needed (Deposit, LR Fees, Solicitor Fees) before you have exchanged.

onthemend88

jimbo2108 said:

You need the full deposit in the help to buy ISA. I got the bonus to cover the fees then got a rebate of anything elft over. I was paying a 5% deposit which I had, then the bonus was used to cover solicitor fees and then got a rebate after.

Sorry to jump on the thread but how soon after completion did you get your bonus and how was it paid?

Tiglet2

The bonus is paid to the solicitor, not you.  The solicitor adds the bonus amount to the account and, once all costs and fees are paid on completion, the balance of monies would be returned to you (if any) a few days after completion.

alex_163163

It also causes a lot of confusion that the term ‘deposit’ applies to 2 things.

there is the exchange deposit. This is typically 10% of the purchase price that the seller would get to keep if the buyer didn’t complete on the purchase for any reason. This is the truest meaning of the word deposit to me. It is this that the bonus can’t be used towards. 

However I think confusion then arises because lenders also use the term ‘deposit’ when referring to the amount of equity a person put into a house, ie the part not covered by the mortgage. The bonus can be used towards this. So say you had saved 10k of actual cash in the isa, and so you knew your bonus was gonna be 2.5k, you could have applied for a lesser mortgage amount as your ‘mortgage deposit’ / equity would be 12.5k.

if you haven’t factored in the bonus in the ‘mortgage deposit’ funds, then it will get added to the pool of monies the solicitor holds on completion day and any funds not needed to complete the transaction will be returned to you by them. 

iampetesmith

Mine went like this:

The solicitor knew that exchange was getting close, so told me to close the HTB ISA. I had two HTB ISAs (one for me and one for the wife), one of which was a "split" ISA that allowed extra savings on top of the ISA limit. Some people have their deposit savings spread across a few accounts, others just have a HTB ISA but all accounts that hold deposit funds should be emptied into one place (best to use your current account).

It's important that you have enough money to cover your deposit and solicitor's fees. The solicitor should send a final bill that includes the deposit with their outstanding fees on top. The next bit depends on your solicitor. Ours took our HTB closing statements and worked out what the bonus would be, then deducted it from the final bill. This meant that we saw the "bonus" straight away as it was knocked off what we paid out at the end, so we actually didn't pay the solicitors fees and paid slightly less towards the deposit.

Other solicitors will take the lot, then refund the bonus once they've claimed it. This is why it's important to make sure you still have enough money for the full deposit and solicitors fees, and why they say that you can't use the bonus towards your deposit (even though sometimes you technically can).

If you're short and were counting on using the bonus money towards the deposit, you might be able to arrange for the solicitor to take the bonus amount off the final bill anyway so that you pay less on exchange and use the bonus before the solicitor claims it back. We had enough for the deposit and fees though, so what was left in our bank after paying the reduced bill just went on furniture.

Sncjw

I contacted the solicitor and he said I could pay 5% on exchange then when the bonus comes use that for the remaining then top it up. 

This is is why it is confusing because your all saying different things. I did make lender aware of the bonus and I really don’t want to get a new mortgage offer as we have been waiting a while now. I was told you can’t use it for solicitor fees. Il be using any money left over In my account for that. 

Competsoph

Hi all,

Can I clarify this with numbers as this is something which has also confused me for a long time!
These are all examples with some context about myself included to make it as easy to understand as possible.
House price: 150k
My deposit: 10% or 15k
Help to buy ISA has 5k, bonus will be 25% or 1.25k. Total HTB with bonus: 6.25k
Solicitor fees: approx 1k

Will this bonus cash be used to reduce the total amount of money needed from the bank for the ‘mortgage’? (For example needing 128.75k instead of 130k)
 Or will this bonus money be used to pay the solicitor? 

Sorry but it is very confusing! 🤓🙉