Virgin Money Help to Buy ISA

MarkColinSmall

In 2016 I opened a Virgin Money Help to Buy ISA with an initial investment of £1,200 and £200 per month thereafter.  I am currently getting 1.00% gross interest.  

The idea at the time was to use this towards buying my first home.  The current value of of my HTBI is £16,000, so the Government will top up my savings by 25% (up to £3,000) when I  buy my first home.  However, with house prices in Bristol getting more and more expensive and the limit of £250,000, I won't be able to use this for my first time home.   

I understand that I will only be able to use this for solicitor fees or furniture.

My question is, as my Gross Interest rate is 1.00%, should I withdrawal the money and put it into a higher rate Savings Account or any other recommendations?

Thanks
Mark

eskbanker

When are you likely to buy?  If it's more than a year away (and if you're under 40) then you could get £8K into a Lifetime ISA, which would then be increased by the same 25% bonus but can be used towards properties at up to £450K.

If you'll be buying before then, yes, no point in leaving it in the HTB ISA if you can get better rates elsewhere.

Not sure what you mean by "I understand that I will only be able to use this for solicitor fees or furniture" - if you're buying beyond the HTB ISA property limit then you don't receive the bonus but can use the balance for anything you like, including towards the property value itself....

MarkColinSmall

Thanks for your reply.

Unfortunately, I am over 40, so not able to switch to a LISA.   

I was told that I could not use the balance for the deposit (as I was looking at a property over the HTB ISA property limit), but only for the solicitor fees or furniture.

Personally I cannot see the Government changing the £250K limit anytime soon, so maybe it's time to put it somewhere else with a higher interest rate.

grumiofoundation

MarkColinSmall said:

Thanks for your reply.

Unfortunately, I am over 40, so not able to switch to a LISA.   

I was told that I could not use the balance for the deposit (as I was looking at a property over the HTB ISA property limit), but only for the solicitor fees or furniture.

Personally I cannot see the Government changing the £250K limit anytime soon, so maybe it's time to put it somewhere else with a higher interest rate.

Who told you this?
Since you are buying a property over the limit you aren't 'using' the HTB ISA (i.e. aren't getting a bonus) other than as a 'normal' savings account. 

Therefore the balance (16,000) can be used for whatever you want.

masonic

MarkColinSmall said:

I was told that I could not use the balance for the deposit (as I was looking at a property over the HTB ISA property limit), but only for the solicitor fees or furniture.

As others have pointed out, that's complete nonsense. Even if it wasn't, how could your solicitor know whether or not the money transferred to them had ever previously been held in a HTB ISA?

What you cannot do is claim the Government bonus. If you are planning to make an offer on this property imminently, then it may not be worth opening a new savings account just for a few weeks. The best rate you could obtain is 0.5% higher than the 1% you are already getting. You'll only earn an extra £1.54 per week in interest on the £16k balance.

Jami74

MarkColinSmall said:

However, with house prices in Bristol getting more and more expensive and the limit of £250,000, I won't be able to use this for my first time home.   

My question is, as my Gross Interest rate is 1.00%, should I withdrawal the money and put it into a higher rate Savings Account or any other recommendations?

I'm in the same position, where I live there aren't any houses for £250,000. I am still at least a couple of years away from buying though, maybe house prices will plummet or some life changing event will see me moving up north.

masonic said:

The best rate you could obtain is 0.5% higher than the 1% you are already getting. You'll only earn an extra £1.54 per week in interest on the £16k balance.

And that puts it all in perspective! 

MarkColinSmall

grumiofoundation said:

MarkColinSmall said:

Thanks for your reply.

Unfortunately, I am over 40, so not able to switch to a LISA.   

I was told that I could not use the balance for the deposit (as I was looking at a property over the HTB ISA property limit), but only for the solicitor fees or furniture.

Personally I cannot see the Government changing the £250K limit anytime soon, so maybe it's time to put it somewhere else with a higher interest rate.

Who told you this?
Since you are buying a property over the limit you aren't 'using' the HTB ISA (i.e. aren't getting a bonus) other than as a 'normal' savings account. 

Therefore the balance (16,000) can be used for whatever you want.

A Mortgage Consultant at a local estate agent told me this

MovingForwards

MarkColinSmall said:

grumiofoundation said:

MarkColinSmall said:

Thanks for your reply.

Unfortunately, I am over 40, so not able to switch to a LISA.   

I was told that I could not use the balance for the deposit (as I was looking at a property over the HTB ISA property limit), but only for the solicitor fees or furniture.

Personally I cannot see the Government changing the £250K limit anytime soon, so maybe it's time to put it somewhere else with a higher interest rate.

Who told you this?
Since you are buying a property over the limit you aren't 'using' the HTB ISA (i.e. aren't getting a bonus) other than as a 'normal' savings account. 

Therefore the balance (16,000) can be used for whatever you want.

A Mortgage Consultant at a local estate agent told me this

Find a better broker.

SuperHans1

I bought a property without using my HTB ISA as you couldn't get anything for under £250k in the South East. I still have my HTB ISA many years later as the interest rates have been better than most savings accounts. I still benefit from the higher interest but cannot use it to claim the government bonus.

I transferred my HTB ISA to Newcastle BS as they are currently paying 1.79% (https://www.newcastle.co.uk/savings/cash-isas/help-to-buy-isa). You do need to complete the transfer in branch (I did this whilst on holiday in the Yorkshire Dales) but the account can then be managed online afterwards.

masonic

SuperHans1 said:

I bought a property without using my HTB ISA as you couldn't get anything for under £250k in the South East. I still have my HTB ISA many years later as the interest rates have been better than most savings accounts. I still benefit from the higher interest but cannot use it to claim the government bonus.

I transferred my HTB ISA to Newcastle BS as they are currently paying 1.79% (https://www.newcastle.co.uk/savings/cash-isas/help-to-buy-isa). You do need to complete the transfer in branch (I did this whilst on holiday in the Yorkshire Dales) but the account can then be managed online afterwards.

You are presumably aware that you need to make a fraudulent declaration in order to transfer or continue paying into a HTB ISA if you are no longer eligible to hold one.

SuperHans1

masonic said:

SuperHans1 said:

I bought a property without using my HTB ISA as you couldn't get anything for under £250k in the South East. I still have my HTB ISA many years later as the interest rates have been better than most savings accounts. I still benefit from the higher interest but cannot use it to claim the government bonus.

I transferred my HTB ISA to Newcastle BS as they are currently paying 1.79% (https://www.newcastle.co.uk/savings/cash-isas/help-to-buy-isa). You do need to complete the transfer in branch (I did this whilst on holiday in the Yorkshire Dales) but the account can then be managed online afterwards.

You are presumably aware that you need to make a fraudulent declaration in order to transfer or continue paying into a HTB ISA if you are no longer eligible to hold one.

I'm still eligible to hold the account, I'm just not eligible to claim the bonus.