HTB ISA Deposit

dd95

do banks give you a mortgage quote based on the total deposit or your deposit exc. the bonus?

in other words, would 18k in two HTB ISA's be the deposit banks would take into account, with the 25% bonus just part of your early repayment allowance, or would they base their offer based on 22.5k (18k plus 25% bonus)?

kmurray1003

It would be based on your total deposit of £22.5k, as this is how much you will have for the deposit.

RauHughes

The HTB bonus will count towards the mortgage deposit, but NOT the exchange deposit. Essentially, when you exchange contracts you have to pay your solicitor 10% of the property value. Your HTB bonus can't be claimed at this stage, so you will have to have 10% of the purchase value in liquid cash to put down. Thus if you're applying for a 90% mortgage and counting on the bonus towards your 10% deposit, you're unlikely to have the full 10% needed for the exchange deposit and will need to borrow / raise temporary funds.

We are buying with HTB currently and this is what my solicitor explained to me. Others may be more knowledgeable. We have a 15% deposit with HTB bonus so it's not an issue for us, but I understand it can be if you're looking to borrow 90% LTV

dd95

thanks Rau

yes aware of two types of deposit, i just wasn't sure whether the mortgage company base their offers on the HTB deposit including or excluding the bonus, i.e. if you had 18,000 with a 4500 bonus would they literally treat it as a bonus and base their offer on 18000

RauHughes

Np.

My understanding is the mortgage company don't care a great deal on where the deposit comes from, just what LTV you're lending at. The let the solicitors figure out the details. So if you apply for a 85% LTV mortgage on the basis you're paying £22,500 as a deposit they wouldn't be interested in whats bonus and what's savings, they let the solicitor sort it out.  You'd get the same offers someone with £22,500 in normal savings.

Again, this is based on my (very limited) experience. For example, an element of our deposit is gifted. Halifax haven't asked for any evidence of this at all, but the solicitors have requested letters, ID and evidence of funds from the third party.