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  • FIRST POST
    • Former MSE Helen
    • By Former MSE Helen 30th Nov 15, 1:31 PM
    • 2,324Posts
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    Former MSE Helen
    MSE News: Help to Buy ISA rates begin to be unveiled
    • #1
    • 30th Nov 15, 1:31 PM
    MSE News: Help to Buy ISA rates begin to be unveiled 30th Nov 15 at 1:31 PM
    Many major providers have announced how much their Help to Buy ISAs will pay in light of their launch tomorrow...

    Read the full story:

    Help to Buy ISA rates begin to be unveiled



    You might also find our fully researched Help to Buy ISA guide helpful.


    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

Page 1
    • physicsgirl
    • By physicsgirl 30th Nov 15, 4:11 PM
    • 126 Posts
    • 1,425 Thanks
    physicsgirl
    • #2
    • 30th Nov 15, 4:11 PM
    • #2
    • 30th Nov 15, 4:11 PM
    Why haven't they released more details about products launching tomorrow??

    Could someone check my logic/maths on this: having a Help to Buy ISA not only limits you opening another ISA this year but also in all subsequent years you hold it. I therefore initially thought the Nationwide account that allows a split between Cash (1.4%) and HtB (2%) ISAs might be better than Halifax HtB (4%) (if they don't offer a split (still not confirmed)). But then I did some sums.

    Assuming:
    (1) the ISA rates are fixed for 4 years (not guaranteed),
    (2) the total ISA allowance is fixed for 4 years (also not guaranteed),
    (3) you are a basic rate tax payer,
    (4) you can deposit the maximum ISA allowable each year,
    (5) interest rates are calculated annually,
    (6) you buy a house after 4 years,
    (7) after 4 years there are some houses left in the UK that cost less than £250,000 (or £450,000 in London)...
    Here's how the sums compare:

    Depositing £3400 in the first year and £2400 in subsequent years, and compounding the interest, after 4 years, with the Halifax HtB you'd have £11769.03 compared to £11172.13 with Nationwide (losing not only the difference in interest of £596.90, but also a government bonus of £149.23).

    Thus the interest gained on using the rest of your ISA allowance would have to be £746.13 MORE than the interest in a normal savings account. To get this kind of gain from the Nationwide 1.4% cash ISA, the best alternative would have to be a savings account offering 0.81% interest** (1.0125% for the next 4 months, or if you had already used up your £1000 "free" interest from April). Since the best buy easy access savings are currently higher than this (around 1.5%) it would seem that the higher interest HtB account is the way to go.

    Obviously there are a lot of assumptions, but I would imagine for most people the Halifax HtB ISA would be the best choice. Of course if interest rates were to rise then that throws things a little, but hopefully the ISA and easy access account would rise at ~the same rate. It's (7) that I'm most worried about...

    ** Based on saving £11840 in the first year and £12840 in subsequent years, after 4 years you'd have £52126.76 in the Nationwide 1.4% and £51375.70 in the other account at 0.81%, i.e. £750.05 more in the Nationwide.
    Last edited by physicsgirl; 30-11-2015 at 4:12 PM. Reason: spelling
    • colsten
    • By colsten 30th Nov 15, 4:29 PM
    • 11,643 Posts
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    colsten
    • #3
    • 30th Nov 15, 4:29 PM
    • #3
    • 30th Nov 15, 4:29 PM
    Could someone check my logic/maths on this: having a Help to Buy ISA not only limits you opening another ISA this year but also in all subsequent years you hold it.
    Originally posted by physicsgirl
    You can
    1. subscribe to an S&S ISA alongside subscribing to an HTB ISA
    2. at certain providers (Nationwide, Natwest, may be others), you can also subscribe to a cash ISA alongside an HTB ISA

    However, an S&S ISA should be a 7-10 year minimum commitment, and a non-HTB cash ISA is most likely a waste of money as you can get much better interest for up to £50K in other places.

    HTB ISA rates are variable, thus not fixed for 4 years.

    the best alternative would have to be a savings account offering 0.81% interest** (1.0125% for the next 4 months, or if you had already used up your £1000 "free" interest from April).
    Originally posted by physicsgirl
    the best alternative are accounts that pay between 4% and 6% AER.
    Last edited by colsten; 30-11-2015 at 4:32 PM.
    • masonic
    • By masonic 30th Nov 15, 5:28 PM
    • 12,747 Posts
    • 10,248 Thanks
    masonic
    • #4
    • 30th Nov 15, 5:28 PM
    • #4
    • 30th Nov 15, 5:28 PM
    having a Help to Buy ISA not only limits you opening another ISA this year but also in all subsequent years you hold it. I therefore initially thought the Nationwide account that allows a split between Cash (1.4%) and HtB (2%) ISAs might be better than Halifax HtB (4%) (if they don't offer a split (still not confirmed)). But then I did some sums....
    Originally posted by physicsgirl
    It's good that you challenged your own assumption and did the sums. Others have been posting in other threads that the Nationwide account is superior owing to the ability to use the remainder of your ISA allowance for a separate cash ISA. However, your calculated minimum 0.81% net interest on other savings to break even with the Halifax HTB ISA can be beaten by the vast majority of people - even those who can't/won't open a current account.
    • compbren
    • By compbren 30th Nov 15, 7:38 PM
    • 132 Posts
    • 203 Thanks
    compbren
    • #5
    • 30th Nov 15, 7:38 PM
    • #5
    • 30th Nov 15, 7:38 PM
    Definitly going to open one with Halifax. Got around £25k saved up so will put the £1,200 in month one and just £200 every month until I feel ready to buy. Looking to save at least £40k before I think about buying so should acheive that in around 18 months.
    House Deposit: £28,000 and still saving!
    • colsten
    • By colsten 30th Nov 15, 7:47 PM
    • 11,643 Posts
    • 11,020 Thanks
    colsten
    • #6
    • 30th Nov 15, 7:47 PM
    • #6
    • 30th Nov 15, 7:47 PM
    Newcastle BS 1.51%.
    And you can put the rest of your ISA allowance into their 1% or 1.16% ISAs.
    That's ISAs incl a 0.65% bonus .......................
    You WHAT???

    I think we should begin to think about setting up an initiative against the exploitation of First Time Buyer savers.

    In the meantime, I hope no FTB falls for the mediocre Newcastle HTB ISA offer. On currently available info, Halifax at 4% sounds the way to go.
    • AndyTh
    • By AndyTh 30th Nov 15, 8:13 PM
    • 11 Posts
    • 5 Thanks
    AndyTh
    • #7
    • 30th Nov 15, 8:13 PM
    S&S ISA transfer
    • #7
    • 30th Nov 15, 8:13 PM
    Could someone check my logic/maths on this: having a Help to Buy ISA not only limits you opening another ISA this year but also in all subsequent years you hold it.
    The first tax year you can only put a maximum of around £1800 - £2000 in (£1200 in Dec, and £200 each month after till end of April 5th)

    Given you can put money in a Stocks & Shares ISA without actually investing, and since the New ISA rules, I believe you can transfer S&S ISA to Cash ISA, it seems you can get around the "no separate Cash ISA" rule by putting the remainder of your allowance in a S&S ISA in March, and transfer it to a Cash ISA in April.

    This should allow you to put the £2000 in H2B ISA and £13,240 in S&S ISA this tax year, transfer the £13,240 to a Cash ISA next tax year, while putting in the £2400 in H2B ISA and £12,850 in S&S ISA again that year.

    Of course I expect Halifax's 4% to only last for a period, and to not allow transfers.

    I use a S&S ISA anyway for investment, but I'd consider that myself if I feel I put too much in investments, or am able to transfer to an Innovative Finance ISA next April.
    Last edited by AndyTh; 30-11-2015 at 8:25 PM.
    • jimjames
    • By jimjames 30th Nov 15, 8:26 PM
    • 13,308 Posts
    • 12,361 Thanks
    jimjames
    • #8
    • 30th Nov 15, 8:26 PM
    • #8
    • 30th Nov 15, 8:26 PM
    I'd still question why you'd need to put any money in a cash ISA other than HTB when such better rates are available. If it's for deposit then long term tax status is irrelevant.
    Remember the saying: if it looks too good to be true it almost certainly is.
    • AndyTh
    • By AndyTh 30th Nov 15, 8:50 PM
    • 11 Posts
    • 5 Thanks
    AndyTh
    • #9
    • 30th Nov 15, 8:50 PM
    • #9
    • 30th Nov 15, 8:50 PM
    The first tax year you can only put a maximum of around £1800 - £2000 in (£1200 in Dec, and £200 each month after till end of April 5th)
    Originally posted by AndyTh
    Actually, this is only if you start this year. If starting from next April, then I guess it's £3400, but better to start earlier if you are able to.
    Last edited by AndyTh; 30-11-2015 at 10:01 PM.
    • colsten
    • By colsten 30th Nov 15, 11:00 PM
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    colsten
    But why would you do this if you can get more interest outside an ISA?
    • physicsgirl
    • By physicsgirl 1st Dec 15, 7:55 AM
    • 126 Posts
    • 1,425 Thanks
    physicsgirl
    You can
    1. subscribe to an S&S ISA alongside subscribing to an HTB ISA
    Originally posted by colsten
    Yes, this I hadn't included this option, although I believe the majority of first time buyers won't go for it.

    2. at certain providers (Nationwide, Natwest, may be others), you can also subscribe to a cash ISA alongside an HTB ISA
    Originally posted by colsten
    This is what my calculations were based on

    the best alternative are accounts that pay between 4% and 6% AER.
    Originally posted by colsten
    I was making the point that the best alternative accounts would have to be 0.81% in order for for the Nationwide cash ISA to be a better option than Halifax, but of course there are higher interest rates available (those rates being dependent on how much you can save and the length of time you can lock it away, but the easiest instant access being around 1.5% currently).

    HTB ISA rates are variable, thus not fixed for 4 years.
    Originally posted by colsten
    I thought that might be the case, I wonder how long it'll be before Halifax drop theirs in line with everyone else?
    • tripled
    • By tripled 1st Dec 15, 8:53 AM
    • 2,466 Posts
    • 1,126 Thanks
    tripled
    Of course I expect Halifax's 4% to only last for a period, and to not allow transfers.
    Originally posted by AndyTh
    It seems that transfers are allowed.

    From http://static.halifax.co.uk/assets/pdf/isas/pdf/cash-isa-account-conditions.pdf

    If youíre transferring from Halifax, please remember [...]
    Particular rules apply if you want to transfer a Help to Buy: ISA. Please see the Help to Buy: ISA section.
    Transferring a Help to Buy: ISA:
    ē If you transfer the whole of your Help to
    Buy: ISA to another Help to Buy: ISA, you
    can still save in the Governmentís help to
    buy scheme.
    ē If you transfer the whole of your Help to Buy:
    ISA to a non Help to Buy: ISA, this will mean
    you have told us you want to close your
    Help to Buy: ISA. We will tell the scheme
    administrator, and send you your Help to
    Buy: ISA Closing Documents. Your Eligible
    Conveyancer can then claim your bonus.
    ē If you transfer all or part of your previous
    years Help to Buy: ISA savings to a non Help
    to Buy: ISA, but you keep your Help to Buy:
    ISA with some savings in it, your Help to
    Buy: ISA will continue. However you will not
    be able to claim any help to buy bonus for
    the savings you transfer.
    • Former MSE Helen
    • By Former MSE Helen 1st Dec 15, 9:43 AM
    • 2,324 Posts
    • 971 Thanks
    Former MSE Helen
    MSE News: Help to Buy ISAs now available for first-time buyers
    First-time buyers will be able to save into one of the Government's Help to Buy ISAs from today...

    Read the full story:

    Help to Buy ISAs now available for first-time buyers



    You might also find our fully researched Help to Buy ISA guide helpful.


    Click reply below to discuss. If you havenít already, join the forum to reply. If you arenít sure how it all works, read our New to Forum? Intro Guide.

    • physicsgirl
    • By physicsgirl 1st Dec 15, 1:53 PM
    • 126 Posts
    • 1,425 Thanks
    physicsgirl
    Originally posted by tripled
    It doesn't seem to be previous cash ISAs that you can transfer into it though, only previous HtB ISAs (which you couldn't have had before today anyway) unless I'm reading it wrong?
    • epm-84
    • By epm-84 1st Dec 15, 2:22 PM
    • 1,422 Posts
    • 4,355 Thanks
    epm-84
    I've noticed Halifax say they can reduce interest at 14 days notice on the other hand Virgin Money say 2 months notice.

    Also a question I've not subscribed to a Cash ISA this year so can I open a Help2Buy ISA and transfer an existing Cash ISA with previous tax year subscriptions to a better paying Cash ISA account without opening one of the combined offerings the likes of Nationwide and Natwest are doing.
    • colsten
    • By colsten 1st Dec 15, 2:35 PM
    • 11,643 Posts
    • 11,020 Thanks
    colsten

    Also a question I've not subscribed to a Cash ISA this year so can I open a Help2Buy ISA and transfer an existing Cash ISA with previous tax year subscriptions to a better paying Cash ISA account without opening one of the combined offerings the likes of Nationwide and Natwest are doing.
    Originally posted by epm-84
    Yes you can, as long as you are using the formal ISA transfer process and as long as you do not pay any new money into that ISA.

    However, why anyone would want a normal cash ISA when you can get much better interest in non-ISA accounts is a mystery to me.
    • TheNewGuy
    • By TheNewGuy 1st Dec 15, 3:26 PM
    • 74 Posts
    • 13 Thanks
    TheNewGuy
    So just to confirm Halifax won't alter the 4% rate for four years, thanks?
    • tain
    • By tain 1st Dec 15, 3:29 PM
    • 617 Posts
    • 684 Thanks
    tain
    So just to confirm Halifax won't alter the 4% rate for four years, thanks?
    Originally posted by TheNewGuy


    No - they most likely WILL alter the rate. It's variable, plus has clauses that it can change with just 14 days notice. I'd be surprised if it didn't change.


    However from what I can see, most of the others are also variable. 4% variable is better than anything lower variable.
    • FreakShow!
    • By FreakShow! 1st Dec 15, 3:58 PM
    • 30 Posts
    • 2 Thanks
    FreakShow!
    Rather than create a new thread, I'll tack my question here.

    I have an ISA with the post office (almost the full ISA amount I could) that I opened last year. I want to open one of these H2B ISAs for this tax year. So I can do that, but can someone explain what I can do with last years ISA? Can I transfer the full amount and get 4% on that too?

    Reading the Halifax website seems to suggest that I can only transfer up the allowable limit (i.e. the £1000), but that would be of new ISA money surely, not stuff already in an ISA?
    • epm-84
    • By epm-84 1st Dec 15, 7:28 PM
    • 1,422 Posts
    • 4,355 Thanks
    epm-84
    Rather than create a new thread, I'll tack my question here.

    I have an ISA with the post office (almost the full ISA amount I could) that I opened last year. I want to open one of these H2B ISAs for this tax year. So I can do that, but can someone explain what I can do with last years ISA? Can I transfer the full amount and get 4% on that too?

    Reading the Halifax website seems to suggest that I can only transfer up the allowable limit (i.e. the £1000), but that would be of new ISA money surely, not stuff already in an ISA?
    Originally posted by FreakShow!
    The maximum you can put in to a Help2Buy ISA in the first month is £1200.

    I've not read the Halifax terms in full so I'm not sure if they allow a partial transfer from an existing ISA. If you have more than £1200 in your existing ISA and a partial transfer is not allowed then you'd either have to withdrawn £1200 from your existing ISA or open a combi-ISA from another provider like Nationwide.
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