Just found out we can't use our Help to Buy ISAs for house purchase. Should we switch over to LISAs?

Sandwich

I wasn't aware there was a £250,000 house price cap with the HTB ISA, and our agreed purchase price is just over that (£260,000). Is there any way for us to still get either that bonus, or the bonus from the LISA? 

The only two solutions I can think of are (1) hoping the house gets down valued after surveys (in which case the HTB ISA should work) or (2) switching as much as we can into LISAs (I think there's a £4000 cap per year) and use that instead, because the house price cap with that is £450,000. 

Although I'm not sure if you have to wait after transferring from a HTB to a Lifetime ISA? The government website just says: "You can transfer money from a Help to Buy ISA to a Lifetime ISA."

Any help would be appreciated. We're in full-on "we're going to lose the house" panic mode. 

PlumLuck

You can only receive the LISA bonus if the account has been open more than 12 months.

grumiofoundation

As above^ unless you already have a lifetime ISA open (and it has been open for above 12 months) that is a no-goer for a purchase that is currently in progress.

Do you need the HTB bonus to complete?

knightstyle

Negotiate with the seller buy for £250k and give £10k or less for fixtures?

Exodi

This happened to us - we both had over £5k in our HTB accounts and both lost out because we ended up buying a house for £280k. We were pretty devestated at the time as we lost out on over 2k-3k but it was our own fault.

When we opened the accounts we knew the limit was 250k, but over the years forgot this was the reason (assuming it was affordability) and slowly increased our maximum budget.

As PlumLuck said, you need to have had the LISA open for more than 12 months before you can claim from it and our solicitor essentially said 'hard luck' on the matter.

Fortunately it didn't prevent us from buying... we just had to go without a dining table for a few months!

EDIT: and to be completely honest, even if we had realised before we offered on our current property - I doubt we would have deliberately cut back down to only looking at £250k houses anyway. Sadly the only way to fix it now would be to invent a time-machine and go back in time to invest in a LISA instead.

PlumLuck

Also don't assume that just because the house gets down-valued to £250k that the seller will agree to re-negotiate.

We lost out on our HTB bonus too because we bought a house for over £250k. Honestly I never thought that I'd be looking at a larger budget, and 18 months ago when we decided to buy, we thought we were going to buy within 12 months. It ended up being more than 12 months later so we could have salvaged some of it through a LISA but we never could have known that!

Sandwich

knightstyle said:

Negotiate with the seller buy for £250k and give £10k or less for fixtures?

That's an interesting idea. Would that not be considered fraud though? Because you're manipulating the sale price to your advantage (not saying it's definitely fraud, but I don't know). 

Sandwich

Exodi said:

This happened to us - we both had over £5k in our HTB accounts and both lost out because we ended up buying a house for £280k. We were pretty devestated at the time as we lost out on over 2k-3k but it was our own fault.

When we opened the accounts we knew the limit was 250k, but over the years forgot this was the reason (assuming it was affordability) and slowly increased our maximum budget.

As PlumLuck said, you need to have had the LISA open for more than 12 months before you can claim from it and our solicitor essentially said 'hard luck' on the matter.

Fortunately it didn't prevent us from buying... we just had to go without a dining table for a few months!

EDIT: and to be completely honest, even if we had realised before we offered on our current property - I doubt we would have deliberately cut back down to only looking at £250k houses anyway. Sadly the only way to fix it now would be to invent a time-machine and go back in time to invest in a LISA instead.

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

PlumLuck

I think the issue is that they're not expecting you to buy a 'nice, family home' as a FTB. But as FTBs get older, they'll be looking for houses that were traditionally second or third purchases as their first.

We've gone for the extra space because we'll both be working from home the majority of the time for the foreseeable future and working in the same room was driving us nuts. Otherwise we could have probably stuck with a small fixer-upper at £250k if we really wanted.

Exodi

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Add to the mix the fact the £250k figure has remained static since 2015, despite house prices having risen by around 30% in the same period.

seradane

Exodi said:

Sandwich said:

That's unfortunate. I think the cap is a bit low. It's hard to get a nice family home for under £250k in lots of parts of the country, not just London. 

Well the cap is £450k in London but I know what you mean - there is massive disparity between what 250k can buy up and down the country and in Kent (where I live), there weren't many 3 bed houses for sub 250k. I'd imagine up north you have a much larger selection of properties you can redeem the ISA against.

Again, first time buyers aren't supposed to be the ones purchasing three bed houses, so the ISA limit reflects that...