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  • FIRST POST
    • robgoode
    • By robgoode 4th Mar 18, 8:10 AM
    • 48Posts
    • 32Thanks
    robgoode
    First Time Buyer - HTB ISA
    • #1
    • 4th Mar 18, 8:10 AM
    First Time Buyer - HTB ISA 4th Mar 18 at 8:10 AM
    Wonder if anyone can help me due to getting mixed messages from 2 brokers and my solicitor regarding the HTB ISA and 25% bonus.

    We are currently in the process of purchasing a house for 127995. We are putting down a 10% deposit and mortgaging the other 90%.

    In our HTB ISA's we have just over 9% saved. 2 brokers that I've spoken to during the process said our deposit would be our HTB ISA's on exchange (plus the 1% from our bank accounts if required to equal 10% on exchange) then 25% government bonus on the date of completion. Current workings out would mean we have a 12-13% deposit to put down.

    We were advised to go for a mortgage value of 90%, 115,000. The 2 brokers I used to compare deals with both said our HTB ISA's would be used for deposit at exchange, the 25% bonus on completion. Any amount that put us over the 10% deposit would be used as an overpayment to the mortgage, effectively reducing our mortgage from 115,000 to 113,000 on day 1 of owning the house. Our mortgage conditions allows for unlimited overpayments, no restrictions such as 10% of mortgage value per year.

    I've spoken to our solicitor the other day and she says that what I was advised is incorrect and that we can only put down a maximum of 10% down, as per the terms of the mortgage offer. We would be due a refund from our ISA's in order to make sure the ISA's + 25% bonus total exactly 10%.

    Is this right?
    Last edited by robgoode; 04-03-2018 at 8:12 AM.
Page 1
    • ashe
    • By ashe 4th Mar 18, 10:34 AM
    • 530 Posts
    • 367 Thanks
    ashe
    • #2
    • 4th Mar 18, 10:34 AM
    • #2
    • 4th Mar 18, 10:34 AM
    My understanding is HTB ISA Balance can be used for exchange deposit, but the bonus cannot be, If you cant do 10% deposit for exchange without the bonus you need to negotiate a lower exchange deposit amount. upon completion, the bonus is applied to the deposit amount, any refund would come from the left over amount after all solicitors fees, EA fees etc are all paid. If you want to overpay and your mortgage allows it then you could? Again, I could be wrong but that is my understanding of it.

    They may mean you are DUE a refund and it is not automatically overpaid to the mortgage? Which would seem right as they are handling the money. You could then apply it to the mortgage yourself to overpay.
    • robgoode
    • By robgoode 5th Mar 18, 7:33 PM
    • 48 Posts
    • 32 Thanks
    robgoode
    • #3
    • 5th Mar 18, 7:33 PM
    • #3
    • 5th Mar 18, 7:33 PM
    My understanding is HTB ISA Balance can be used for exchange deposit, but the bonus cannot be, If you cant do 10% deposit for exchange without the bonus you need to negotiate a lower exchange deposit amount. upon completion, the bonus is applied to the deposit amount, any refund would come from the left over amount after all solicitors fees, EA fees etc are all paid. If you want to overpay and your mortgage allows it then you could? Again, I could be wrong but that is my understanding of it.

    They may mean you are DUE a refund and it is not automatically overpaid to the mortgage? Which would seem right as they are handling the money. You could then apply it to the mortgage yourself to overpay.
    Originally posted by ashe
    Am I right in thinking if we are due a refund it would be on the value we have saved, meaning we would lose out on the 25% bonus linked to the value of the refund? The way I read it the HTB ISA + bonus would be used for the deposit, even if over the 10% deposit.
    • lmartin87
    • By lmartin87 5th Mar 18, 7:54 PM
    • 18 Posts
    • 2 Thanks
    lmartin87
    • #4
    • 5th Mar 18, 7:54 PM
    • #4
    • 5th Mar 18, 7:54 PM
    To solve this same issue, we're actually putting down slightly more than a 10% deposit, with the bit above the 10% being the bonus. That way the full 10% can be used for the exchange deposit, then the conveyancer can claim the bonus and use that for completion.
    • robgoode
    • By robgoode 5th Mar 18, 8:02 PM
    • 48 Posts
    • 32 Thanks
    robgoode
    • #5
    • 5th Mar 18, 8:02 PM
    • #5
    • 5th Mar 18, 8:02 PM
    To solve this same issue, we're actually putting down slightly more than a 10% deposit, with the bit above the 10% being the bonus. That way the full 10% can be used for the exchange deposit, then the conveyancer can claim the bonus and use that for completion.
    Originally posted by lmartin87
    Thats what we planned on doing but our solicitor said the deposit and bonus must equal 10% of the property value. Anything over 10% we would get back as a refund, missing out on the bonus that would have earned. Has your solicitor said something different?
    • lmartin87
    • By lmartin87 5th Mar 18, 8:11 PM
    • 18 Posts
    • 2 Thanks
    lmartin87
    • #6
    • 5th Mar 18, 8:11 PM
    • #6
    • 5th Mar 18, 8:11 PM
    As I understand it, the deposit at exchange - paid to your vendors solicitors - typically equals 10% of the property value. So I'll be paying 10% exactly over for that. Then the solicitor will claim the bonus and the mortgage funds and use those in combination for completion. Meaning my mortgage is slightly lower than 90% LTV. I calculated it exactly when applying for my mortgage.

    My understanding is that if your mortgage is funding 90% of the property value and the remaining 10% is made up of both your bonus (which you won't have yet and which is unavailable at exchange) and your own deposit funds, then you'll need the solicitor to negotiate a slightly lower exchange deposit with the vendors solicitors. This must happen often since many mortgages are 95% LTV these days.

    Does this make sense?
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