The scheme was first introduced in 2015 to help to encourage first time buyers to get onto the property ladder. So far millions of aspiring homeowners have opened an account and over 200,000 people have taken their first step on to the property ladder through the help of the scheme. Whilst the scheme is now closed, those who joined before the deadline can continue saving until 2030. Help to Buy ISAs work as an incentive in which any money saved, the government will top up these contributions by 25%.
When viewing potential properties, it is important to remember that unlike the Help to Buy Equity Loans, a Help to Buy ISA does not limit you to buying only a new-build home! In order to qualify for the bonus, the property you intend to buy must be mortgaged with any kind of residential mortgage except a buy-to-let mortgage. If you have saved using the Help to Buy ISA scheme and you are now ready to buy, there is an additional set of steps to the generic conveyancing process which will need to be carried out, which are as follows:
- Finish saving for your mortgage deposit – the balance of your Help to Buy ISA, including any interest earnt, will determine the bonus you receive.
- Get your offer accepted.
- Inform your bank that you are ready to buy and ask them to close the account. Following this you will receive a closing letter.
- Provide your Conveyancer with the closing letter as they will need this to apply for your government bonus. It is vital that you do not wait until completion to inform your Conveyancer to apply for your government bonus as it will be too late.
- Your Conveyancer will receive your government bonus which will be added to the money you are putting towards your first home.
- Your Conveyancer will then complete the purchase of your new home using the full bonus in addition to your deposit.
With the Help to Buy ISA you are able to have money saved elsewhere, which you may also add to your deposit. You only need to have the amount of money in your Help to Buy ISA which you want to be taken into account when the bonus is calculated. For example, you may have saved the maximum amount of money in your Help to Buy ISA to qualify for the maximum bonus, which is £12,000.00 with a bonus of £3,000.00 and then you may also have savings in a different account to which you also want to put down as part of your deposit.
It is important to remember that any bonus earnt through your Help to Buy ISA can only be used for the purchase of the property. It cannot be used for other costs such as conveyancing fees or the exchange deposit as the bonus is only paid upon completion. It is important to inform your Conveyancer as early as possible if you require your bonus to be part of your deposit if you are taking out a 90% or 95% mortgage as they may be able to negotiate a lower exchange deposit for you.
If your purchase falls through, you can restore your savings in the Help to Buy scheme. If your Conveyancer has already received your government bonus at the time the transaction fails, they will need to provide you with a ‘purchase failure notification’ which you can show to your bank who will then reopen your account. In such circumstances, once your account is back open, you will be able to deposit the full amount you saved in one transaction.
At Hodgkinsons Solicitors, Skegness, our specialist Team of Residential Conveyancers often assist clients to purchase properties using the Help to Buy ISA scheme. The Team are very familiar with the process involved and they can provide expert advice regarding any queries you may have. Whether your property is local or further afield, our expert Property Specialists have many years of experience and knowledge in the purchase of properties within the East Midlands, rural Lincolnshire and the surrounding areas of Skegness including Boston, Lincoln, Sleaford, Louth and Grimsby. To get in touch for expert legal advice call Hodgkinsons Solicitors on 01754 897150 or submit a contact form and a member of the Team will contact you.