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  • FIRST POST
    • Former MSE Sam M
    • By Former MSE Sam M 1st Dec 15, 2:23 PM
    • 238Posts
    • 159Thanks
    Former MSE Sam M
    Help to Buy ISA guide
    • #1
    • 1st Dec 15, 2:23 PM
    Help to Buy ISA guide 1st Dec 15 at 2:23 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 87
    • samymullane
    • By samymullane 4th Mar 19, 12:17 PM
    • 1 Posts
    • 0 Thanks
    samymullane
    Help To Buy ISA Information
    Hiya,

    I need a little help please.

    Me and my partner are looking to open a Help To Buy ISA each to save for our first house. We are looking to save around 500 each every month, as we can only put up to 200 into the account each month we are going to have to save the rest in a separate account.

    When we are looking to close the account and buy a property will we be able to include the money we have saved in our separate account?

    I am new to this so any information would be helpful please.

    Thank you!
    • eskbanker
    • By eskbanker 4th Mar 19, 12:26 PM
    • 10,099 Posts
    • 12,164 Thanks
    eskbanker
    The short answer to your question is yes, you can use non-HTB money alongside your HTB pot.

    A different way of addressing the issue is to use one or two Lifetime ISAs instead, as these have a higher annual contribution limit than HTBs, as well as a higher property value cap (outside London). LISAs need to be held for at least a year before (penalty-free) use for a first-time property purchase, so if you're over a year away from buying they'll probably be a better bet as you can earn more free government money than with HTBs....
    • kaycastle
    • By kaycastle 6th Mar 19, 7:25 AM
    • 90 Posts
    • 183 Thanks
    kaycastle
    I have a question about help to buy ISAs.

    I've already got a house but can you use help to buy ISA products anyway. I know I won't get 25% bonus obviously, but I couldn't help but notice that all the interest rates seem to be better on those then some of the standard ISAs. Is that allowed?
    Oct 2017: 228,041.09
    Feb 2019: 215,765.98
    March 2019: 214,209.62
    • bowlhead99
    • By bowlhead99 6th Mar 19, 8:56 AM
    • 8,603 Posts
    • 15,741 Thanks
    bowlhead99
    I have a question about help to buy ISAs.

    I've already got a house but can you use help to buy ISA products anyway. I know I won't get 25% bonus obviously, but I couldn't help but notice that all the interest rates seem to be better on those then some of the standard ISAs. Is that allowed?
    Originally posted by kaycastle
    No, if you already have a property (or have ever owned one) you will not be able to truthfully sign the 'eligible customer declaration' on account opening which states that you don't own and have never owned any interest in residential property.

    You are right, the rates are higher than for most other cash ISA types. This is because:

    - the accounts are small in size - customer is only going to be putting in a maximum 200 of new money a month, so not much for the bank to pay interest on (less than 'normal' ISA products);
    - may sometimes result in a mortgage sale too ;
    - it's a competitive market with limited number of eligible customers who want the product;

    - so banks or building societies that offer it, are happy to pay high rates

    If you want to save 200pm but are frustrated that most cash ISAs pay low interest rates, you should check out the various 'regular saver' non-ISA accounts offered by various high street names. For example, Nationwide have one at 5% on up to 250pm. Even after tax (if you even earn enough to exceed your personal savings allowance) the net rate is competitive.
    • kaycastle
    • By kaycastle 6th Mar 19, 3:14 PM
    • 90 Posts
    • 183 Thanks
    kaycastle
    No, if you already have a property (or have ever owned one) you will not be able to truthfully sign the 'eligible customer declaration' on account opening which states that you don't own and have never owned any interest in residential property.

    You are right, the rates are higher than for most other cash ISA types. This is because:

    - the accounts are small in size - customer is only going to be putting in a maximum 200 of new money a month, so not much for the bank to pay interest on (less than 'normal' ISA products);
    - may sometimes result in a mortgage sale too ;
    - it's a competitive market with limited number of eligible customers who want the product;

    - so banks or building societies that offer it, are happy to pay high rates

    If you want to save 200pm but are frustrated that most cash ISAs pay low interest rates, you should check out the various 'regular saver' non-ISA accounts offered by various high street names. For example, Nationwide have one at 5% on up to 250pm. Even after tax (if you even earn enough to exceed your personal savings allowance) the net rate is competitive.
    Originally posted by bowlhead99
    I use regular savers lots

    I just wanted to check incase I was missing out haha!!
    Oct 2017: 228,041.09
    Feb 2019: 215,765.98
    March 2019: 214,209.62
    • Ryanlwb2
    • By Ryanlwb2 21st Mar 19, 1:24 PM
    • 2 Posts
    • 0 Thanks
    Ryanlwb2
    Second Help to Buy ISA
    I currently have around 1800 saved in a Help to Buy ISA.

    I am wondering if it's feasible to withdraw that money, close the ISA and then open a new Help to Buy ISA when the new financial year starts in a couple of weeks. I would then deposit the initial 1200 and carry on from there.

    I don't want to transfer, my query is whether it's possible to close one account and start another in the next year in the way mentioned above.

    I know that sounds mad and immediately puts me 600 behind in my savings but I have cash to use in order to start again with a new account and could do with freeing up the 1800 saved in my current Help to Buy ISA.

    Slightly odd question, just want to know if it's possible to close and open an account in the above way. Thanks.
    • eskbanker
    • By eskbanker 21st Mar 19, 1:53 PM
    • 10,099 Posts
    • 12,164 Thanks
    eskbanker
    Yes, you can, as per https://www.helptobuy.gov.uk/help-to-buy-isa/faq/#919a24ea-e1f7-648f-8ce9-ff0000ad17aa:
    If I close my account, can I open a new Help to Buy: ISA?
    If you hold a Help to Buy: ISA, and close it without claiming your government bonus, you can open a new account in the following tax year (provided the new account is opened before 30 November 2019).
    • CarolynCh
    • By CarolynCh 7th Apr 19, 11:13 PM
    • 48 Posts
    • 33 Thanks
    CarolynCh
    Using only the bonus for the mortgage deposit (not the savings)
    I have read both the MSE & government guides about help-to-buy ISAs but can't find the definitive answer to my question:

    Is it allowed to save 1600 in a high ISA, close it with the provider, obtaining the confirmation letter/certificate to pass on to the solicitor who then claims the bonus and pays to the mortgage provider, but not actually use the 1600 + interest for the purchase?

    The reason for this is that the exchange (and hence the 5% exchange deposit) is taking place several months prior to completion as it is a new build. The only savings remaining at completion will be this money and will be needed for moving costs etc.

    Thanks to anyone who knows/can point me in the right direction of confirmation of this either way.
    • masonic
    • By masonic 8th Apr 19, 5:49 AM
    • 11,556 Posts
    • 9,197 Thanks
    masonic
    Is it allowed to save 1600 in a high ISA, close it with the provider, obtaining the confirmation letter/certificate to pass on to the solicitor who then claims the bonus and pays to the mortgage provider, but not actually use the 1600 + interest for the purchase?
    Originally posted by CarolynCh
    There is nothing in the legislation or scheme rules stating that the balance of the ISA must be used towards the purchase. You'd need to get your solicitor on board with this though.
    • bowlhead99
    • By bowlhead99 8th Apr 19, 6:21 AM
    • 8,603 Posts
    • 15,741 Thanks
    bowlhead99
    There is nothing in the legislation or scheme rules stating that the balance of the ISA must be used towards the purchase. You'd need to get your solicitor on board with this though.
    Originally posted by masonic
    Yes, the rule is that the bonus can only be obtained and collected by the conveyancer/ solicitor into their client money account, on condition of applying the bonus (and any interest that the conveyancer gives on the bonus amount for the period while it's sitting in their client money account) towards the purchase price - so the bonus will reduce the size of the mortgage you need or the amount of money (if any) you intend to put towards the purchase price after the initial 5% exchange deposit.

    It's a multi stage process:
    - you close the HTB ISA with at least 1600 in it and obtain the closing documentation;
    - you give the closing documents to the conveyancer and make the relevant declarations;
    - the conveyancer claims the bonus cash into their client money account;
    - the conveyancer pays the bonus cash over to the seller at the same time as he pays the rest of the completion monies (including the mortgage amount he got from your lender etc)

    None of those stages involve you giving the conveyancer the 1600, if you don't want to. Any money you do give them (e.g. for further cash towards the purchase price or for their fees and other things) can come from whatever bank account you like, and doesn't specifically need to come from the 1600 you got when you closed the ISA.

    When Masonic says you might need to get your solicitor on board with this, he means that solicitors when you tell them you have a HTB account and need them to process a bonus claim for you, might assume that the 1600 and the bonus amount will be available towards the property; and if you don't want to spend the 1600 on the property you should tell them up front and have them confirm they understand your plans - which would also give them a chance to tell them it's not allowed, if there is some rule against it that we aren't aware of.

    If you were doing your savings as a Lifetime ISA, they would have to confirm that the whole amount withdrawn from the account would be used on the property purchase to avoid penalties. But a HtB ISA does not involve confirming the whole amount withdrawn will be applied to the purchase - the claim form only relates to the bonus itself. The account closure paperwork for the 1600 is only there to help them prove what amount of bonus is eligible to be claimed.
    Last edited by bowlhead99; 08-04-2019 at 6:23 AM.
    • Adelemurray
    • By Adelemurray 9th Apr 19, 4:24 PM
    • 1 Posts
    • 0 Thanks
    Adelemurray
    I just wondered why I can't purchase a house of more than 250,000 with the help to buy ISA?
    Why should there be a limit?
    • eskbanker
    • By eskbanker 9th Apr 19, 4:33 PM
    • 10,099 Posts
    • 12,164 Thanks
    eskbanker
    I just wondered why I can't purchase a house of more than 250,000 with the help to buy ISA?
    Why should there be a limit?
    Originally posted by Adelemurray
    The scheme is intended to assist those who are genuinely needing help to get onto the housing ladder by giving them a handout of money that ultimately comes from taxpayers - many would resent a minuscule slice of their taxes going to subsidise someone who doesn't really need help to buy themselves a valuable asset.

    So, that's why there's a limit rather than a blank cheque approach - naturally some, especially in expensive areas, will feel that the limit is too low and that they deserve help but the line has to be drawn somewhere.

    Having said that, have you considered Lifetime ISA as an alternative, with its higher 450K property value cap?
    • badger09
    • By badger09 9th Apr 19, 5:21 PM
    • 6,808 Posts
    • 6,402 Thanks
    badger09
    I just wondered why I can't purchase a house of more than 250,000 with the help to buy ISA?
    Why should there be a limit?
    Originally posted by Adelemurray
    Because that is what the government decided when they introduced the scheme.
    • Rich2808
    • By Rich2808 12th Apr 19, 1:32 AM
    • 763 Posts
    • 609 Thanks
    Rich2808
    The scheme is intended to assist those who are genuinely needing help to get onto the housing ladder by giving them a handout of money that ultimately comes from taxpayers - many would resent a minuscule slice of their taxes going to subsidise someone who doesn't really need help to buy themselves a valuable asset.
    Originally posted by eskbanker
    No - that is just the spin!

    You could equally argue why is it right that the taxpayer should subsidise someone buying a 450,000 property in London through a help to buy isa. To get a mortgage to buy a 450k property without a huge deposit would mean you would need to earn 100k+a year or more than 3 times average wages. Why exactly does someone earning 100k merit a government handout paid for by those earning far less out of their taxes?

    None of these schemes to help first time buyers are primarily there to help first time buyers - they are there to keep house prices high and make the board members and shareholders of the major developers extremely wealthy. Anyone who thinks otherwise really isn't paying attention!

    Now if you earn 100k and can afford to buy a 450k property - fill yer boots. But lets not pretend anyone is helping the poor and downtrodden - they won't be helped at all as they don't earn enough to buy anyway and a 3k bonus won't change that.
    Last edited by Rich2808; 12-04-2019 at 1:37 AM.
    • mills.123
    • By mills.123 16th Apr 19, 4:26 PM
    • 2 Posts
    • 0 Thanks
    mills.123
    Solicitor's Fees
    Does anyone know if you can use your 25% governemnt contribution to pay for the solicitor's fees?


    Thanks!
    • masonic
    • By masonic 16th Apr 19, 4:55 PM
    • 11,556 Posts
    • 9,197 Thanks
    masonic
    Does anyone know if you can use your 25% governemnt contribution to pay for the solicitor's fees?
    Originally posted by mills.123
    No, it must be put towards the funds used at completion to buy the property.
    • eskbanker
    • By eskbanker 16th Apr 19, 5:55 PM
    • 10,099 Posts
    • 12,164 Thanks
    eskbanker
    Does anyone know if you can use your 25% governemnt contribution to pay for the solicitor's fees?
    Originally posted by mills.123
    No, it must be put towards the funds used at completion to buy the property.
    Originally posted by masonic
    This is undoubtedly the correct answer as defined by the scheme rules, which are quite unambiguous on the subject.

    However....

    Over on the house buying board, there are many tales of conveyancers who are prepared to have the government bonus added to the overall pot of money due at completion, meaning that the bonus money is effectively used towards fees, etc, rather than necessarily being directly traceable to a contribution to the purchase price.

    There are some examples of this at https://forums.moneysavingexpert.com/showthread.php?t=5966715 (among other threads) so it's perhaps worth discussing with your solicitor to establish how flexible they're able and willing to be, as it's their opinion rather than that of anonymous internet strangers that you'll be counting on!
    • Alexland
    • By Alexland 16th Apr 19, 6:17 PM
    • 4,890 Posts
    • 4,223 Thanks
    Alexland
    Over on the house buying board, there are many tales of conveyancers who are prepared to have the government bonus added to the overall pot of money due at completion, meaning that the bonus money is effectively used towards fees, etc, rather than necessarily being directly traceable to a contribution to the purchase price.
    Originally posted by eskbanker
    I would rather have a solicitor who went to the effort to understand the scheme rules. If they allow you to use the HTB ISA bonus (or LISA withdrawal) towards the expenses it makes me wonder what else are they not doing properly...

    Alex
    • masonic
    • By masonic 16th Apr 19, 6:41 PM
    • 11,556 Posts
    • 9,197 Thanks
    masonic
    This is undoubtedly the correct answer as defined by the scheme rules, which are quite unambiguous on the subject.

    However....

    Over on the house buying board, there are many tales of conveyancers who are prepared to have the government bonus added to the overall pot of money due at completion, meaning that the bonus money is effectively used towards fees, etc, rather than necessarily being directly traceable to a contribution to the purchase price.

    There are some examples of this at https://forums.moneysavingexpert.com/showthread.php?t=5966715 (among other threads) so it's perhaps worth discussing with your solicitor to establish how flexible they're able and willing to be, as it's their opinion rather than that of anonymous internet strangers that you'll be counting on!
    Originally posted by eskbanker
    Well, of course, armed with a solicitor willing to break the rules (either deliberately or through ignorance), a lot can be achieved. I'm reminded of an account of someone who convinced their solicitor to put in a fraudulent bonus claim over 2 weeks after completion because one or both parties overlooked the need to process the claim several weeks earlier.

    The trouble with these things is you never know what will happen if, at the 11th hour, someone realises what is being done and tries to put a stop to it.

    The workaround in this particular circumstance is to use the bonus towards completion, but take advantage of the loophole whereby the capital saved in the HTB ISA does not need to be put towards the purchase.
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