Help to Buy ISA - any experience?

[Jimmy Recard]

Has anyone here used a Help to Buy ISA?

I have one with some money in it and deposit £200 a month. Some of the information on websites is hard to understand (especially since I know bugger all about mortgages)

I'm happy to let it accumulate up to the £12k maximum as I'm happy in my rented house at the moment.

Does the interest attract the 25% bonus too? I've done some maths and I think I should reach £12k a couple of months early, taking interest into account.

Who gets the bonus when I buy a house? The mortgage provider?

This is pretty basic stuff, but I know someone here will be able to describe it in a way I understand if I ask the right questions
To

[AdamL7]

I've got a help to buy ISA, but haven't found a house yet.

The way I understand it is:

You will get the bonus money on your interest.

When you've got a house offer accepted go to your ISA bank and let them know you're closing the account and they'll give you a letter which you give to the solicitor then he will sort out the bonus. The bonus will be used to reduce the mortgage amount.

[Jimmy Recard]

Thanks, I thought as much.

A guy at work was telling me today how he has one with Santander at the Santander rep was adamant that upon buying a house, he'd be given the bonus in cash to spend on whatever he wanted, which I knew was rubbish.

He was surprised when i told him that I thought it was handed over via the solicitor or to the lender.


OK then, to anyone who knows, how does it work? Is having £12k (for instance) plus £3k bonus like having a £15k deposit or is it still a £12k deposit?

[MKA29]

Jimmy Recard said:

Thanks, I thought as much.

A guy at work was telling me today how he has one with Santander at the Santander rep was adamant that upon buying a house, he'd be given the bonus in cash to spend on whatever he wanted, which I knew was rubbish.

He was surprised when i told him that I thought it was handed over via the solicitor or to the lender.


OK then, to anyone who knows, how does it work? Is having £12k (for instance) plus £3k bonus like having a £15k deposit or is it still a £12k deposit?

I read somewhere the bonus is only given after you make the deposit... its very unclear. That would mean you've received a £3k bonus after you've put down your £12k deposit... perhaps to pay off some of the outstanding balance of the house

From help to buy gov

"The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home."

Lifetime ISA is given as interest, not help to buy.

[NickCQ]

MKA29 said:

"The bonus cannot be used for the deposit due at the exchange of contracts"

Tricky phrasing. Sounds like the bonus can count as equity at completion but not when you exchange. So it does increase your 'deposit' in the usual sense of the word, but you probably have to get the seller to agree to a smaller sum changing hands at exchange.

If you are going for a 90% LTV mortgage, say, you might get away with a <10% sum at exchange, subsequently topped up with the H2B bonus at completion.

[barker22]

Number 10 on this link tells you what it can be used for. In fact the entire link gives you all the info you need

http://www.moneysavingexpert.com/savings/help-to-b...

[Jimmy Recard]

MKA29 said:

I read somewhere the bonus is only given after you make the deposit... its very unclear. That would mean you've received a £3k bonus after you've put down your £12k deposit... perhaps to pay off some of the outstanding balance of the house

From help to buy gov

"The bonus cannot be used for the deposit due at the exchange of contracts, to pay for solicitor’s, estate agent’s fees or any other indirect costs associated with buying a home."

Lifetime ISA is given as interest, not help to buy.

I know that, I mean the interest on the Help to Buy account paid by the bank. I will be at £12k a few months earlier than if I was paying £200 a month without receiving interest.

I mean that if I've paid in £11k and £1k is from interest for a total of £12k (random figures), can I draw the bonus on £12k or only on £11k?

I assumed the £3k would go towards paying the balance rather than deposit from what I've read, but the information given is sparse and as someone who knows nothing about mortgages, hard to understand!

[Jimmy Recard]

barker22 said:

Number 10 on this link tells you what it can be used for. In fact the entire link gives you all the info you need

http://www.moneysavingexpert.com/savings/help-to-b...

Brilliant, that helps. I read that ages ago but I think it has been updated since - plenty of things are explained perfectly there that were unclear to me before

[mjb1]

You don't have to use the money from a HTB ISA directly towards the house purchase in any way. The bonus doesn't get paid until after exchange, so it can't be used as part of the exchange deposit (but could make up part of the funds used to complete). What happens is that you close the ISA, the cash you've saved + the interest comes back to you to do as you please, and the bank gives you the closure certificate to give to your conveyancer (note that not all conveyancers are registered for the HTB ISA scheme, so make sure you choose one that is). After you've exchanged, your conveyancer claims the bonus (based on the closing value, so the bonus is also paid on the interest) and it will go into their client account to be allocated to the purchase payment or the legal fees (or back to you as cash if there's a surplus).

I did it last year and it was pretty painless really. When I opened the HTB ISA, I had no intention of buying any time soon, but it was kind of thrust upon me when my landlord decided to sell up. So I was glad I had done it when I did (I opened the Halifax one when it was paying 4% interest too).

[Jimmy Recard]

mjb1 said:

You don't have to use the money from a HTB ISA directly towards the house purchase in any way. The bonus doesn't get paid until after exchange, so it can't be used as part of the exchange deposit (but could make up part of the funds used to complete). What happens is that you close the ISA, the cash you've saved + the interest comes back to you to do as you please, and the bank gives you the closure certificate to give to your conveyancer (note that not all conveyancers are registered for the HTB ISA scheme, so make sure you choose one that is). After you've exchanged, your conveyancer claims the bonus (based on the closing value, so the bonus is also paid on the interest) and it will go into their client account to be allocated to the purchase payment or the legal fees (or back to you as cash if there's a surplus).

I did it last year and it was pretty painless really. When I opened the HTB ISA, I had no intention of buying any time soon, but it was kind of thrust upon me when my landlord decided to sell up. So I was glad I had done it when I did (I opened the Halifax one when it was paying 4% interest too).

Thanks mjb, I've only just seen your comment but it's really helpful as I start to look around and budget.

I wish I could get 4% on mine! I've got 2.53% with Barclays which isn't a bad rate. I could get 2.75% with a local building society but apparently with them you have to pay in by cheque or cash, and I prefer to just do a bank transfer from my current account every month. Petrol and car parking fees would probably wipe out the extra interest! More than that, they said I'd have to open a new account rather than transfer my existing one, and it has taken a while to build it up to where it is so I'd rather not start again!

Edited by Jimmy Recard on Thursday 11th January 17:33