About to hit Help to buy cap, what next for saving?

peps1

I'm about to reach the £12,000 mark on my help to buy ISA so will not get any more bonus when I buy, and with Halifax having just reduced the interest to 1.7% What should I do with my money new regards saving? 

eskbanker

You'll still earn 1.7% interest on the excess above £12K though, or you could perhaps consider non-HTB regular savers for that.

Saga

Peps1, you're about a year ahead of me. Yorkshire BS cut their rate in April from 2.25% to 1.75%, then tust two weeks later to 1.00%.  With no new HTB Isas since 2019, I didn't realise you could transfer – Halifax's website seems to indicate you can transfer into their HTB Isa.  Problem for me I'd lose 4 months worth of interest and, assuming Halifax/YBS didn't change their rates in the next 8-12 months, make an extra £18 by transferring. However, that's a big "if" so it's probably not worth it until current year's interest is paid in March 2021. Oh, and too old for a Lisa...

Anyway, what's your reason for not using your HTB so far?  For me, I just haven't found the right property despite looking essentially everyday for years and having, now, about 25% deposit saved for my price bracket.

bowlhead99

Saga said:

 I didn't realise you could transfer – Halifax's website seems to indicate you can transfer into their HTB Isa. 

Yes, the very first line of the https://www.halifax.co.uk/isas/cash-isas/help-to-buy-isa/ page is "Transfer your existing Help to Buy: ISA to us. You can carry on saving towards your first home and could earn a bonus from the Government".  And Yorkshire also allow transfers in the other direction.

Problem for me I'd lose 4 months worth of interest and, assuming Halifax/YBS didn't change their rates in the next 8-12 months, make an extra £18 by transferring. However, that's a big "if" so it's probably not worth it until current year's interest is paid in March 2021. 

 Your existing HTB ISA at Yorkshire is not a fixed term account but an instant access one. You can take money out of it or transfer out to someone else's ISA product without interest penalty.

So, there's no reason you would 'lose 4 months worth of interest'. You would get the interest you had earned so far, and start earning interest at a higher rate going forward. Assuming the rates don't change in the coming months - which as you say, is an unknown.

assuming Halifax/YBS didn't change their rates in the next 8-12 months, make an extra £18 by transferring. 

You mention that peps1 who has £12k in their account is 'about a year ahead of me', implying you have close to £10k in the account or will get there over the course of the coming year.  If the rate on offer is 1.7% (0.7% higher), the extra 0.7% on an average balance of £10k is £70 a year. As there is no interest penalty to transfer, the £70 is all extra 'profit'.

Saga

bowlhead99 said:

Saga said:

 I didn't realise you could transfer – Halifax's website seems to indicate you can transfer into their HTB Isa. 

Yes, the very first line of the https://www.halifax.co.uk/isas/cash-isas/help-to-buy-isa/ page is "Transfer your existing Help to Buy: ISA to us. You can carry on saving towards your first home and could earn a bonus from the Government".  And Yorkshire also allow transfers in the other direction.

Problem for me I'd lose 4 months worth of interest and, assuming Halifax/YBS didn't change their rates in the next 8-12 months, make an extra £18 by transferring. However, that's a big "if" so it's probably not worth it until current year's interest is paid in March 2021. 

 Your existing HTB ISA at Yorkshire is not a fixed term account but an instant access one. You can take money out of it or transfer out to someone else's ISA product without interest penalty.

So, there's no reason you would 'lose 4 months worth of interest'. You would get the interest you had earned so far, and start earning interest at a higher rate going forward. Assuming the rates don't change in the coming months - which as you say, is an unknown.

assuming Halifax/YBS didn't change their rates in the next 8-12 months, make an extra £18 by transferring. 

You mention that peps1 who has £12k in their account is 'about a year ahead of me', implying you have close to £10k in the account or will get there over the course of the coming year.  If the rate on offer is 1.7% (0.7% higher), the extra 0.7% on an average balance of £10k is £70 a year. As there is no interest penalty to transfer, the £70 is all extra 'profit'.

Thanks for the reply.  The YBS HTB Isa "calculates interest daily on cleared balances" but only "pays the interest annually on the anniversary of the account opening", not monthly. So if you transfer you won't be paid the interest 'accrued' to that point.

eskbanker

Saga said:
The YBS HTB Isa "calculates interest daily on cleared balances" but only "pays the interest annually on the anniversary of the account opening", not monthly. So if you transfer you won't be paid the interest 'accrued' to that point.

Not a valid conclusion I'm afraid - just because interest is normally paid out annually doesn't mean that you lose out if withdrawing/transferring/closing mid-year.  It's standard practice for savings accounts to pay interest on a pro rata basis when closing or transferring (regardless of whether interest is normally paid monthly or annually), and YBS specifically states "The Help to Buy: ISA account allows instant withdrawals, without loss of interest".

Saga

eskbanker said:

Saga said:
The YBS HTB Isa "calculates interest daily on cleared balances" but only "pays the interest annually on the anniversary of the account opening", not monthly. So if you transfer you won't be paid the interest 'accrued' to that point.

Not a valid conclusion I'm afraid - just because interest is normally paid out annually doesn't mean that you lose out if withdrawing/transferring/closing mid-year.  It's standard practice for savings accounts to pay interest on a pro rata basis when closing or transferring (regardless of whether interest is normally paid monthly or annually), and YBS specifically states "The Help to Buy: ISA account allows instant withdrawals, without loss of interest".

OK, I wasn't aware of this standard practice, and I interpreted 'instant withdrawal' in the product terms as different to transfer to another HTB Isa.

Saga

Does anyone know if the Halifax 1.7% is the current best rate for transferring an existing HTB Isa?