Help To Buy ISA

redelizabeth01

My son has saved £12,600 in his HTB ISA. I know this qualifies him for a bonus of £3000 towards buying a house however he is not using  a Mortgage,  as he is buying a house with the ISA plus some other savings and we are giving him the balance up to £130.000. 
Can anybody explain how  he goes  about claiming the £3000 bonus from the government scheme under these circumstances please
thanks

masonic

He does not, because he is not eligible. Though he can take heart in the fact that by being a cash buyer he will save on fees and interest, which will almost certainly amount to more than the bonus earned as a qualifying FTB using a mortgage.

redelizabeth01

Are you saying he is not eligible for the BONUS? can you explain why this is please, thanks

masonic

redelizabeth01 said:

Are you saying he is not eligible for the BONUS? can you explain why this is please, thanks

The bonus can only be used towards the mortgage deposit of an eligible purchase. If the buyer does not take out a mortgage, then the bonus cannot be claimed.

Have you read the MSE guide? https://www.moneysavingexpert.com/savings/help-to-buy-isa/ see points 4 and 5

redelizabeth01

Read it now, Thanks for your help

njkmr

Can he not get a small mortgage, claim it , the £3000 bonus ,then pay off mortgage ?

Green_hopeful

It doesn’t have to be a commercial mortgage. Our youngest borrowed the money from me and I got a proper mortgage drawn up. That was good enough for him to get the bonus. It also protects the money in case he goes bankrupt. He isn’t very good with money. 

masonic

Green_hopeful said:

It doesn’t have to be a commercial mortgage. Our youngest borrowed the money from me and I got a proper mortgage drawn up. That was good enough for him to get the bonus. It also protects the money in case he goes bankrupt. He isn’t very good with money. 

Out of interest, how much did it cost to put that in place?

Rich2808

I agree its nonsense that someone on £20k buying a £60k house in cash isn't eligible but someone with a £100k salary buying a £449k house in London with a £400k deposit is. But then you need to understand these FTB schemes are always primarily designed to help housebuilders/banks first - not FTBs.

In terms of claiming the bonus - a mortgage is needed - and its the conveyancing solicitor that claims the bonus and completes the paperwork (albeit once the purchase is going through your son will need to contact his isa provider and get them to provide a specific statement to close the account to claim the bonus - he should not just close it and withdraw the cash). So assuming your son takes out a small mortgage to qualify he needs to speak to his solicitor to sort this out - so pick someone who knows about this all.

He will of course also be eligible for the FTB stamp duty incentive too.

Just remember though these schemes are for first time owners - not first time buyers. So if your son was left an inheritance including cash from the proceeds of selling a home (even if he never lived in it as he was one of many beneficiaries or never bought it) - that might also rule him out of both the HTB isa bonus and stamp duty incentive.

Green_hopeful

masonic said:

Green_hopeful said:

It doesn’t have to be a commercial mortgage. Our youngest borrowed the money from me and I got a proper mortgage drawn up. That was good enough for him to get the bonus. It also protects the money in case he goes bankrupt. He isn’t very good with money. 

Out of interest, how much did it cost to put that in place?

Sorry I have only just seen your post. I didn’t pay as my husband is a lawyer but he just filled in a template. I used to be a property lawyer so I had drafted them about 20 years ago but I wouldn’t be safe now. I suspect a property lawyer could do it in an hour.