Help to Buy ISA and existing ISA

Combine Help to Buy ISA with cash ISA

The Help To Buy ISA program has been closed to new applicants since the 30th of November 2019. You can’t take out a new Help To Buy ISA. However, you can still pay into an existing one until 2029. Our guide contains the most current information on the government bonus ISA rules.

Customers often ask us if they can combine a Help to Buy ISA and another savings product, such as a cash ISA, stocks and shares ISA, or cash ISAs.

You’ll need to make sure your budget is as flexible as possible as a first-time purchaser. The rules can be difficult to understand.

With Help to Buy ISAs closing on 30 November 2019, this is the perfect time to get to grips with your savings accounts.

Our advisors are expert Help to Buy ISA providers and can help you explore your eligibility criteria and options.

Use our online mortgage calculator as a guide for your monthly repayments now

Can you have both a cash ISA as well as a Help To Buy ISA?

It all depends on the property purchase price and the value of the property and when the ISA account was opened.

You can open them both in the same tax year, provided they are through banks or building societies. If you are unable to do this, and you have opened a Help To Buy ISA prior to it closing to new applicants you may be eligible to apply for a cash ISA in the next tax year.

Split the cost of an ISA

You can open a Help to Buy ISA if you have an existing cash ISA. Many banks offer a hybrid or split Help to Buy ISA. This allows you to combine your existing savings with Help to Buy ISAs by placing them in one ‘wrapper’.

Split ISA Help to Buy accounts allow you to link your savings to the account and transfer funds between, creating a single account to hold your deposit fund. Although this may mean lower interest rates than what you were getting from your ISA (old), it will not be that bad as there is still the 25% bonus that Help to Buy will give you.

You should also know that if your ISA standard amount to less than £1,200, you don’t need to open a split ISA Help to Buy. You can transfer the money to any Help to Buy ISA.

Assistance to buy an ISA and stocks and shares ISA

You can open a Help To Buy ISA by combining stocks or shares and an ISA in any year. This type of ISA is also possible if you already have a cash ISA or have paid into it. However, Stocks and shares are not subject to the same tax benefits.

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Help to buy ISA vs cash ISA

Because of the government contribution, the Help to Buy ISA is a more generous option than standard savings accounts or ISAs, particularly when interest rates are low. Keep in mind, however, that new applicants won’t be accepted after the 30th of November 2019.

There are many Help to Buy ISAs on the market. Most major high-street banks and building societies offer them at rates up to 2.58%, which is tax-free.

You can withdraw your money from a Help to Buy ISA at any time. If your plans change, you are free to put them into a property deposit. The 25% bonus can only be claimed if you use the mortgage deposit in accordance with its terms and you are able to show your solicitor that you did so.

Contact today if you are interested in a Help to Buy ISA. We’ll match you up with an expert as soon as possible.

Closing of Help to Buy ISAs: What you should know

New applicants will no longer be able to apply for Help to Buy ISAs after November 30, 2019.

New applicants may still apply for a Help to Buy ISA prior to this date. The benefits will continue to be available even after the scheme ends.

Existing applicants will be able to access their Help to Buy accounts and make payments after this date.

Existing members can also transfer up to £4,000 from their Help to Buy ISA funds to a Lifetime ISA.

Contact today for more information on transferring your funds. The mortgage advisors will be able to talk you through all your options and help you choose the best option for you.

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Can you have a junior ISA as well as a Help to Purchase ISA?

Customers often ask us if they can open a Junior ISA or a Help-to-Buy ISA if they are between 16-17 years old. Yes, but the Help to Buy ISA holder must open the account in their name. A parent or guardian can’t do this for them.

Can I get a Help to Buy ISA or a Savings Account?

There are no restrictions on this. If you have filled your Help to Buy ISA but still need to save more money for the deposit, you may need to open a savings bank.

Can my portfolio ISA be combined with a Help to Purchase ISA?

Yes, portfolio ISAs are offered by some ISA managers. This allows you to store multiple products in one wrapper. One of these can be a Help To Buy ISA. You will still have to adhere to the standard allowance limits.

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How to Get the Best Help to Buy a Mortgage

As we have already mentioned, there are no restrictions on mortgage providers who have a Help-to-Buy ISA. Once you have your deposit, you can approach any lender to get a mortgage offer. When applying for your first mortgage, there are several things you should consider.

How much deposit do I need?

The majority of mortgage lenders will lend you up to 95% of the property’s value. This means that you will need to deposit at least 5% and sometimes as high as 15%, 25%, or even more depending on the lender’s risk perception. The deposit will be higher if your risk profile is high (e.g. if you have a lot of poor credit, or are purchasing a nonstandard property).

Remember that you can get a mortgage deal if you make a higher deposit. This is because your monthly interest rate and payments will likely be lower. The ISA can also be used with a Help To Buy equity loan.

How much could you borrow

Different lenders have different ways of working out how much money you can borrow. However, most will lend at 4.5x your salary. Some will loan 5x while others will lend 6x depending on your annual earnings.

This is a good rule of thumb. However, it’s worth talking to an expert about what this means to you. Each lender has its own policy regarding what is considered a salary.

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Your Help to Buy ISA Redeemable

To ensure that your mortgage application is completed on time, you should inform your solicitor or conveyancer if you are using both a Help-to-Buy ISA and an existing cash ISA.

They will need to be instructed to apply for the government bonus. This will be added to your funds to purchase your first home. The bonus must also be included in any capital consolidated at the close of the transaction.

Talk to an expert about Help to Buy ISAs now!

You can call today if you have any questions or request more information so contact us now to speak to one of our experts.

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