Help To Buy ISA / savings advice

WelshJoe

I recently had a letter from Halifax telling me that not only are they reducing the interest rate on my Help To Buy ISA <u>again</u> to 1%, but they are now also introducing a tier system so they now only pay interest on the first £12k in the account, anything over this gets a paltry 0.05% interest. As I recently hit the £12k cap, I was originally planning to keep putting my £200 a month in to the account as I will not be purchasing a house for a least another year or so, to benefit from the interest.
Now however, that is obviously pointless for 0.05%, so I am looking for other options to save £200-£250 a month, as well as siphoning out everything I have that is over the £12k in the H2B. 
Basically I am looking for suggestions for the best return on my monthly savings, I won't need regular access but would like to ability to withdraw in case of emergency. Any advice would be greatly appreciated.

eskbanker

https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/
https://forums.moneysavingexpert.com/discussion/6106986/regular-savings-accounts-the-best-currently-available-list/p1

Alexland

Also worth considering the Virgin Money bank account which pays 2% on up to £1k. They even seem to let you open at least 3 accounts managed with the same login details and app.

grumiofoundation

WelshJoe said:

I recently had a letter from Halifax telling me that not only are they reducing the interest rate on my Help To Buy ISA <u>again</u> to 1%, but they are now also introducing a tier system so they now only pay interest on the first £12k in the account, anything over this gets a paltry 0.05% interest. As I recently hit the £12k cap, I was originally planning to keep putting my £200 a month in to the account as I will not be purchasing a house for a least another year or so, to benefit from the interest.
Now however, that is obviously pointless for 0.05%, so I am looking for other options to save £200-£250 a month, as well as siphoning out everything I have that is over the £12k in the H2B. 
Basically I am looking for suggestions for the best return on my monthly savings, I won't need regular access but would like to ability to withdraw in case of emergency. Any advice would be greatly appreciated.

If you aren't going to be buying for a year or so have you considered a lifetime ISA (whether suitable would depend on timescales, purchase price etc). But you would have the opportunity to contribute 12k to LISA by April 2022 (3 x tax years). Maybe depends if the rough year timescale is a minimum or a maximum? LISA offers some advantages over HTB ISA,offers higher maximum bonus that HTB ISA (other main one being house price limit £450,000 outside London as opposed to £250,000 within london -whether this would be useful to you?), main disadvantage being money is not accessible without a penalty so only really suitable for money earmarked for purchase (or retirement).

https://www.moneysavingexpert.com/savings/lifetime-isas/
https://www.gov.uk/lifetime-isa

WelshJoe

grumiofoundation said:

WelshJoe said:

I recently had a letter from Halifax telling me that not only are they reducing the interest rate on my Help To Buy ISA <u>again</u> to 1%, but they are now also introducing a tier system so they now only pay interest on the first £12k in the account, anything over this gets a paltry 0.05% interest. As I recently hit the £12k cap, I was originally planning to keep putting my £200 a month in to the account as I will not be purchasing a house for a least another year or so, to benefit from the interest.
Now however, that is obviously pointless for 0.05%, so I am looking for other options to save £200-£250 a month, as well as siphoning out everything I have that is over the £12k in the H2B. 
Basically I am looking for suggestions for the best return on my monthly savings, I won't need regular access but would like to ability to withdraw in case of emergency. Any advice would be greatly appreciated.

If you aren't going to be buying for a year or so have you considered a lifetime ISA (whether suitable would depend on timescales, purchase price etc). But you would have the opportunity to contribute 12k to LISA by April 2022 (3 x tax years). Maybe depends if the rough year timescale is a minimum or a maximum? LISA offers some advantages over HTB ISA,offers higher maximum bonus that HTB ISA (other main one being house price limit £450,000 outside London as opposed to £250,000 within london -whether this would be useful to you?), main disadvantage being money is not accessible without a penalty so only really suitable for money earmarked for purchase (or retirement).

Would the bonus not be the same? £12k in a H2B gets £3k bonus, 3 tax years in LISA on £4k saved a year would also be £3k? Or am I missing something?

grumiofoundation

You are right would be same bonus by April 2022 (well slightly later than this as bonus paid 5-7 weeks after contribution).

But LISA is not capped at max. 3k bonus so if you didnt end up buying until April 2023 or later could get higher bonus from LISA. 

Foreverfinance

Can you use a help to buy ISA to purchase a buy to rent mortgage?
I currently live with my parents and they are happy for me to stay providing I pay rent.
The lower overheads opens up some opportunities for me to expand into property and make money from it rather than paying to live in my own house- even though I plan to do this eventually of course. 
This would be my first step in 'building assets' and I thought there would be no better way to do that then to acquire a property to rent.
It's been made apparent to me however that it would be unlikely that the bank would grant me such a mortgage because it would effectively be my 'first house'.
Can someone shed some light on this? 

Alexland

Foreverfinance said:

Can you use a help to buy ISA to purchase a buy to rent mortgage?

https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#is-the-property-I-am-buying-eligible-for-the-government-bonus

"Is the property I am buying eligible for the government bonus?

To qualify for the government bonus, the property you are buying must: be in the UK, have a price of £250,000 or less (with a higher price limit of £450,000 in London), be the only home you will own, be where you intend to live and be purchased with a mortgage."

Your solicitors should stop you from making a false buyer declaration:

https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf

" I intend to occupy the Property as my only or main residence"