New to H2B ISA - help!

edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
4 replies 829 views
frannieannieeefrannieannieee Forumite
7 Posts
edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings
Hi all,

I will probably sound like one of many here but I'm new to the forums and was hoping for some insight into help to buy ISAs.

Myself and my partner started saving this year for our deposit. We save £300 each a month, and are wanting to open a help to buy ISA with the bonus incentive - pay the £200 and put the extra £100 we save into either a savings account or a cash ISA.

My first question is - all help to buy schemes across the banks look the same. I'm probably being naive but is there any difference between them? The interest doesn't look exceptionally outstanding to the others on any of them so I'm assuming this is going to be pretty standard across the board. I can't go through with any application with one provider for fear of not picking the right one. I hover over the 'confirm application' button and decide otherwise!

My second is - Nationwide offer a cash ISA alongside the help to buy which would be what we put the extra £100 into. I'm wondering what the restrictions are on a cash ISA - do you have to contribute into one monthly as a requirement? MSE says that simply withdrawing funds when you wish to take out the money carries penalties - so what are the usual penalties - and would a savings account be better in the long run with that in mind?

Thank you so much in advance - we're feeling a bit lost in everything as everywhere seems to offer the same thing! :huh:

Replies

  • george4064george4064 Forumite
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    Have you considered the LISA?
    "If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes” Warren Buffett

    Save £12k in 2021 - #027 £12,738 (64%)
  • Yes! We were told about it but again it's what is for the best? Do we for a higher interest but on lower payments or lower interest on the extra £100?
  • edited 18 June 2018 at 5:53PM
    WildsoundWildsound Forumite
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    edited 18 June 2018 at 5:53PM
    It depends on your timescale on buying, where you plan to buy, how much the property will be worth and how much you are able to save:

    If planning to buy in less than a year, then Help to Buy ISA is the best choice. The value of the property must be less than £250k outside of London and £450k inside London). You can also contribute an extra £1,000 in the first month of opening an account.

    If you are each only able to save £2,400 per year, then the help to buy ISA would be the best option at this time.

    If you are each only able to save £4,000 per year and buying in over a year, then a LISA would be better. Even though the interest on these are lower than HTB, you would get the £1,000 per year (25%) government bonus which is paid straight away (can take a few weeks to be paid to the account) and would also earn interest. Also you can buy a property up to £450k outside of London with this one. You can also have a stocks and shares LISA if you are willing to take on extra risk to potentially received greater investment returns, although you could lose money by doing so)

    If you are each able to save £6,400 per year and buying in over a year, then open both a Lifetime ISA AND a HTB ISA. You aren't going to get a better cash ISA interest rate on any other product at this time with the HTB ISA. When you come to buy a property, close the HTB ISAs (pocketing the interest) use the Lifetime ISA towards the purchase.

    From my knowledge, Barclays has the best interest rate at the moment for the HTB ISA, and the only cash LISA at the moment is Skipton building society (Nottingham BS coming soon I believe). There are more providers currently for the stocks and shares LISA.
  • masonicmasonic Forumite
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    Yes! We were told about it but again it's what is for the best? Do we for a higher interest but on lower payments or lower interest on the extra £100?
    Each extra £100 will generate £25 inside a LISA. You aren't going to earn £25 interest on £200 even over 3 years in a HTB ISA. The Government bonus dwarfs any difference in interest rates, so the main consideration should be will you wait at least a year (preferably a few months longer) before completing on a property.
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