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  • FIRST POST
    • Former MSE Sam M
    • By Former MSE Sam M 1st Dec 15, 3:23 PM
    • 238Posts
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    Former MSE Sam M
    Help to Buy ISA guide
    • #1
    • 1st Dec 15, 3:23 PM
    Help to Buy ISA guide 1st Dec 15 at 3:23 PM

    Click reply below to discuss. If you haven’t already, join the forum to reply. If you aren’t sure how it all works, read our New to Forum? Intro Guide.
Page 83
    • Alexland
    • By Alexland 13th Jan 19, 1:56 PM
    • 4,183 Posts
    • 3,496 Thanks
    Alexland
    With a HTB ISA you do the withdrawal and the solicitor claims the bonus.

    With a LISA the provider claims the bonus and adds it into your account about a month after each contribution. You can either withdraw the money without penalty at 60+ or your solicitor can make a penalty free withdrawal for a qualifying property purchase after the account has been open 12 months.

    One person cannot use both products to support a property purchase however there is no penalty to withdraw money from the HTB ISA without claiming the bonus.

    Alternatively you can buy a qualifying property with the HTB ISA (and your solicitor will claim by the bonus) and use the LISA (inc bonuses) towards retirement. If doing this a S&S LISA would be most suitable as if invested sensibly the money is likely to grow at or above inflation.

    Yes if you have more money leftover you can just use any other high interest current or savings account.

    You would not be allowed to contribute into another Cash ISA (HTB ISA is a type of Cash ISA) unless you went with a provider who offered a Split Cash ISA.

    Alex
    Last edited by Alexland; 13-01-2019 at 2:04 PM.
    • bobdilan
    • By bobdilan 13th Jan 19, 2:09 PM
    • 4 Posts
    • 1 Thanks
    bobdilan
    Can I use both a HTB ISA and LISA to contribute towards a deposit (but still only get bonus' off 1)?
    Hi all,

    I have a HTB ISA which I've been paying into for a while now, around £5,800 added in. However, I was hoping to buy a property much sooner and would have gone for the LISA if I had known. My situation now is I'm likely to buy now around September 2019, but wondered if it might be better to open a LISA and wait 12 months (so Jan 2020) to buy somewhere.

    My question is, would I be able to use the contributed funds from both ISAs? I understand the bonus' would only be added from one ISA and after completion but is it still possible to use both to contribute towards the mortgage deposit? I could transfer over £4000 as a lump sum but would be missing out on the £1800 which I've put in?

    Thanks

    Bob
    • Alexland
    • By Alexland 13th Jan 19, 2:24 PM
    • 4,183 Posts
    • 3,496 Thanks
    Alexland
    There is nothing stopping you buying with the LISA (after 12 months to avoid the penalty) and just using the HTB ISA for the higher interest rate without claiming the bonus.

    Personally I wouldn't let whatever small differences in ISA bonus values determine when you are going to buy a property. It's the tail wagging the dog again.

    With the LISA the bonus is added around a month after each contribution and with a HTB ISA the bonus is claimed when you buy a property but cannot be used for the exchange deposit.

    Alex
    • masonic
    • By masonic 13th Jan 19, 2:24 PM
    • 10,588 Posts
    • 7,975 Thanks
    masonic
    I have a HTB ISA which I've been paying into for a while now, around £5,800 added in. However, I was hoping to buy a property much sooner and would have gone for the LISA if I had known. My situation now is I'm likely to buy now around September 2019, but wondered if it might be better to open a LISA and wait 12 months (so Jan 2020) to buy somewhere.

    My question is, would I be able to use the contributed funds from both ISAs? I understand the bonus' would only be added from one ISA and after completion but is it still possible to use both to contribute towards the mortgage deposit? I could transfer over £4000 as a lump sum but would be missing out on the £1800 which I've put in?
    Originally posted by bobdilan
    You can contribute funds to the purchase from any source. So if you made a penalty free withdrawal from your LISA in 12 months, then you could also add funds you were saving in the HTB ISA (but no bonus could be claimed of course).

    You could open a LISA with £1 to keep your options open. If you don't end up buying for a year then you can add £4000 either from the HTB ISA or elsewhere, and use all of the funds you have saved towards the purchase.
    • bobdilan
    • By bobdilan 13th Jan 19, 2:47 PM
    • 4 Posts
    • 1 Thanks
    bobdilan
    Thanks Alex and masonic, both helpful responses.

    I think opening a LISA with £1, as a fallback is a great idea and also not letting the bonus' dictate on when to buy.

    I have another question on ISAs in general now (not really sure on where I should be asking this - please suggest a better/the correct place if there is one).

    I understand that paying into a Help to Buy ISA (at a maximum of £200 per month) means you cannot save any of the remaining portion of your total £15,240 ISA allowance into a Cash ISA in the same year. But am I able to open a Lifetime S&S ISA today with £1, as you can open one Cash ISA and one S&S ISA a tax year right? Or would I have to wait till April to do this?
    • eskbanker
    • By eskbanker 13th Jan 19, 3:32 PM
    • 9,053 Posts
    • 10,469 Thanks
    eskbanker
    I understand that paying into a Help to Buy ISA (at a maximum of £200 per month) means you cannot save any of the remaining portion of your total £15,240 ISA allowance into a Cash ISA in the same year. But am I able to open a Lifetime S&S ISA today with £1, as you can open one Cash ISA and one S&S ISA a tax year right? Or would I have to wait till April to do this?
    Originally posted by bobdilan
    As per https://www.gov.uk/individual-savings-accounts:
    There are 4 types of ISA:
    • cash ISAs
    • stocks and shares ISAs
    • innovative finance ISAs
    • Lifetime ISAs
    You can put money into one of each kind of ISA each tax year.
    so you can pay into a Lifetime ISA and a HTB ISA concurrently, even if the LISA is a cash one.

    You can actually pay into both a HTB ISA and another cash ISA concurrently if you choose to use the same provider for both and that provider is one of those allowing split ISAs (effectively lumping multiple cash ISAs together as one). These providers are listed at https://www.moneysavingexpert.com/savings/best-cash-isa/ under "Can I split between a fixed and easy-access ISA (or regular saver ISA)?"

    P.S. The annual ISA allowance is £20,000, since April 2017.
    • Ajacks
    • By Ajacks 13th Jan 19, 4:02 PM
    • 1 Posts
    • 0 Thanks
    Ajacks
    Hi I have a help to buy isa which currently has around £7k in it. Iím looking to buy a home from Dec 2020 or after. Am I best to continue to save in my H2B isa or change to a lifetime isa? TIA for any advice
    • eskbanker
    • By eskbanker 13th Jan 19, 4:15 PM
    • 9,053 Posts
    • 10,469 Thanks
    eskbanker
    Hi I have a help to buy isa which currently has around £7k in it. Iím looking to buy a home from Dec 2020 or after. Am I best to continue to save in my H2B isa or change to a lifetime isa? TIA for any advice
    Originally posted by Ajacks
    LISA gives greater bonus potential (on £4K per tax year, versus £2,400 with HTB) if you have more money available, but HTB ISAs have better interest rates if you're only likely to be adding £200/month.

    That and other aspects are compared at https://www.moneysavingexpert.com/savings/lifetime-isas/#property-6
    • shabeka
    • By shabeka 14th Jan 19, 12:09 PM
    • 1 Posts
    • 0 Thanks
    shabeka
    help to buy ISA
    Hi
    after reading up on the help to buy ISA i'm now a little confused as to weather i can apply for one.

    My aunt recently signed her house over into mine and my sisters name
    so technically i'm a home owner. But as i never bought the property am i still entitled to a help to buy ISA
    Could someone please help?

    thanks in advance
    • eskbanker
    • By eskbanker 14th Jan 19, 12:48 PM
    • 9,053 Posts
    • 10,469 Thanks
    eskbanker
    Hi
    after reading up on the help to buy ISA i'm now a little confused as to weather i can apply for one.

    My aunt recently signed her house over into mine and my sisters name
    so technically i'm a home owner. But as i never bought the property am i still entitled to a help to buy ISA
    Could someone please help?

    thanks in advance
    Originally posted by shabeka
    If your name is on the deeds of a property and you're therefore an owner, you have an interest in it which fails the test at https://www.helptobuy.gov.uk/documents/2015/12/eligibility-of-ftbs.pdf, as it's all about ownership rather than purchase, so no, you're not eligible for a HTB ISA.
    • masonic
    • By masonic 14th Jan 19, 6:07 PM
    • 10,588 Posts
    • 7,975 Thanks
    masonic
    But as i never bought the property am i still entitled to a help to buy ISA
    Originally posted by shabeka
    Let's think about this logically: Someone who has saved up and bought their own property or a share in a property is not entitled to Government assistance with future purchases. Would someone who has been gifted a share in a property be more or less entitled to Government assistance to buy another property?
    • margaretx9
    • By margaretx9 14th Jan 19, 8:44 PM
    • 59 Posts
    • 40 Thanks
    margaretx9
    Let's think about this logically: Someone who has saved up and bought their own property or a share in a property is not entitled to Government assistance with future purchases. Would someone who has been gifted a share in a property be more or less entitled to Government assistance to buy another property?
    Originally posted by masonic
    Say you inherited a £10k house in Bulgaria from your Bulgarian aunt a few years ago. You sold it because you didn't live in Bulgaria and pocketed the £10k in cash. You are ineligible for the help to buy isa if you wanted to buy a house now to live in - even it was a £30k flat in Stoke and you only earn £10k a year.

    But say someone inherits £50k in cash and earns £100k and then buys a flat in London for £449,0000 (£49k deposit/4 times salary mortgage).

    You could equally argue why should someone who earns £100k/inherited £50k in cash gets government help to buy a home but not someone earning £10k who inherited £10k via selling a house abroad they inherited but never lived in?!

    I accept its the rules - but you could equally argue why is the latter more deserving of a government handout to buy a property when they received a far bigger inheritance and earns 10 times as much and is buying a property costing 15 times as much? So lets not suggest the HTB isa is about fairness!
    Last edited by margaretx9; 14-01-2019 at 8:50 PM.
    • masonic
    • By masonic 15th Jan 19, 6:48 AM
    • 10,588 Posts
    • 7,975 Thanks
    masonic
    Say you inherited a £10k house in Bulgaria from your Bulgarian aunt a few years ago. You sold it because you didn't live in Bulgaria and pocketed the £10k in cash. You are ineligible for the help to buy isa if you wanted to buy a house now to live in - even it was a £30k flat in Stoke and you only earn £10k a year.

    But say someone inherits £50k in cash and earns £100k and then buys a flat in London for £449,0000 (£49k deposit/4 times salary mortgage).

    You could equally argue why should someone who earns £100k/inherited £50k in cash gets government help to buy a home but not someone earning £10k who inherited £10k via selling a house abroad they inherited but never lived in?!

    I accept its the rules - but you could equally argue why is the latter more deserving of a government handout to buy a property when they received a far bigger inheritance and earns 10 times as much and is buying a property costing 15 times as much? So lets not suggest the HTB isa is about fairness!
    Originally posted by margaretx9
    Nobody else has mentioned fairness. I mentioned entitlement. Entitlement is the measure of to what degree someone would have a right to something, whereas fairness is a subjective assessment of whether that entitlement is morally right. Your mistake seems to have been to confuse the two. Incidentally, the answer to my question posed above is not 'more' or 'less', it is 'no'.

    In reference to 'fairness', the Government can't arrange a personal hearing for each house buyer to explore all of their personal circumstances in order to decide if they really need help to buy. So they have come up with some simple eligibility rules, which work in some cases but not others. They have worked in the case of the previous poster.

    Someone who is extremely wealthy and inherits will likely not benefit from the scheme because it would be cheaper for them to buy before they've saved enough into the scheme (e.g. immediately in your example), and/or they may be in a position to buy without a mortgage. If they were saving anyway and didn't have the means to buy without their inheritance, then it could be considered unfair to deprive them of benefits accrued prior to their change in circumstances. Arguably, incentivising someone who is a high earner and therefore pays quite a lot of tax to settle down in central London with a few k HTB bonus where they will continue to pay taxes at a higher rate than they would if they moved and worked in a cheaper part of the UK will result in a good outcome for the Treasury overall. Nobody can claim to know what was in the minds of those who formulated the rules.
    Last edited by masonic; Yesterday at 7:39 AM.
    • StaceyFTB
    • By StaceyFTB 16th Jan 19, 12:27 PM
    • 4 Posts
    • 0 Thanks
    StaceyFTB
    Hey hope you can help as my solicitor seems so ignore or answer my questions with more questions.
    Myself and my partner have a HTB isa equaling 11400 we are buying a property for 115000. We believe (if she would give me a straight answer) that my solicitor has negotiated a smaller exchange deposit (we haven’t exchanged yet. But have a agreed a completeion date with the sellers all being well)
    As we have explicitly said we want the bonus to cover the full 10% as we are relying on using extra money we have saved for fees, furniture etc.
    But having closed our HTBs it states bonus is to be claimed on the total closing amount. Which is more that we need. As we will but only putting around a 7.6% deposit down at exchange. Then on completion the rest comes in bonus form.
    We do not want a slightly smaller mortgage as this does help us right now. We have a very competitive 5yr fix that we are very happy with.
    Our solicitor has said any excess funds will be returned to us on completion.
    So am I right I’m thinking she will want the full 11400? Or 75% of this. ( I have asked but no reply as of yet. We are definitely regretting using them)

    Hope some of this makes sense. We are still confused ourselves.
    But if anyone has been through having more money than they needed in their HTB or anything similar. I’d be so greatfull for any insight.

    TIA
    • masonic
    • By masonic 16th Jan 19, 1:22 PM
    • 10,588 Posts
    • 7,975 Thanks
    masonic
    Myself and my partner have a HTB isa equaling 11400 we are buying a property for 115000. We believe (if she would give me a straight answer) that my solicitor has negotiated a smaller exchange deposit (we haven’t exchanged yet. But have a agreed a completeion date with the sellers all being well)
    As we have explicitly said we want the bonus to cover the full 10% as we are relying on using extra money we have saved for fees, furniture etc.
    But having closed our HTBs it states bonus is to be claimed on the total closing amount. Which is more that we need. As we will but only putting around a 7.6% deposit down at exchange. Then on completion the rest comes in bonus form.
    We do not want a slightly smaller mortgage as this does help us right now. We have a very competitive 5yr fix that we are very happy with.
    Our solicitor has said any excess funds will be returned to us on completion.
    So am I right I’m thinking she will want the full 11400? Or 75% of this. ( I have asked but no reply as of yet. We are definitely regretting using them)
    Originally posted by StaceyFTB
    You need to get her to clarify how much she needs from you at exchange. This cannot include the HTB ISA bonus. If it is a 7.6% deposit, and the mortgage deposit is 10%, then there will be a shortfall at completion that will need to come out of your own funds. If more than 7.6%, then you may be in a position where you have more funds than needed at completion - if the solicitor has told you the excess will be returned to you then that's great. Either way, only your solicitor can advise you on the terms negotiated so you'll need to persist with your enquiries.
    • StaceyFTB
    • By StaceyFTB 16th Jan 19, 2:29 PM
    • 4 Posts
    • 0 Thanks
    StaceyFTB
    Thanks for your reply.
    The shortfall. Is the bonus. Which is why we’re giving 7.6 or whatever the value will be. And the remaining will go through on completion. When the bonus is received.
    My query is if anyone else had experienced having more than they need in the help to buys. And what happened with there money. Did they not give it all over a exchange. Or give it all over and receive a refund. Which is what I’m lead to believe may happen in my case.
    Or hope will ��
    And my solicitor can’t even reply to an email. Hence hoping someone has been through this.
    • masonic
    • By masonic 16th Jan 19, 5:55 PM
    • 10,588 Posts
    • 7,975 Thanks
    masonic
    Thanks for your reply.
    The shortfall. Is the bonus. Which is why we’re giving 7.6 or whatever the value will be. And the remaining will go through on completion. When the bonus is received.
    Originally posted by StaceyFTB
    I hadn't appreciated you are planning to withhold part of the closing balance of your HTB ISA and not put it towards exchange or completion. Has your solicitor 100% sanctioned this? Others have been told they must part with the whole closing balance of their HTB ISA in order for the bonus to be claimed (even though this is not a specified requirement of the scheme rules).

    My query is if anyone else had experienced having more than they need in the help to buys. And what happened with there money. Did they not give it all over a exchange. Or give it all over and receive a refund. Which is what I’m lead to believe may happen in my case.
    Plenty of people have been in this situation and posted about it on the forum. Several have seen the money used to reduce the size of the mortgage and this is the most common outcome. While others have said they would be refunded any excess money - I'm not aware of anyone coming back to update us that this actually happened. It really depends upon your solicitor to interpret and apply the scheme rules and YMMV.
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