HELP TO BUY ISAs cannot be opened by new savers anymore but some people may still hold accounts from previous years. These accounts can have money saved into them up until 2029.
Help to buy ISAs were created to help people get on the property ladder and eventually start making mortgage payments. While savings can only be put into a help to buy ISA up until November 2020, it’s possible to use the associated bonus beyond that.
The help to buy bonus can be claimed at any point up until December 1 2030.
The bonus itself could be as high as £3,000 but it will only be provided for a home purchase.
According to the government’s explanation, the person(s) involved will need to instruct their solicitor or conveyancer to apply for the bonus when they’re close to buying a first home.
Once they receive the government bonus, it will be added to the money the saver is putting towards the home.
The bonus must be included with the funds consolidated at the completion of the property transaction.
The home purchaser involved must ensure that the bonus is used correctly as it cannot be used for the deposit due at the exchange of contracts.
Nor can it be used to pay for solicitors, estate agent’s fees or any other indirect costs associated with buying a home.
These rules could become especially important if a person plans to withdraw money from the account.
Unlike Lifetime ISAs, help to buy accounts have no penalties in place for withdrawing funds.
Some people may, knowing there is no penalty, withdraw all their money from the account to move on with the home purchase.
However, this could be a grave mistake as if it is done the person will not receive the “closing statement” which is essential for receiving a bonus.
In order to move forward with the purchase, the conveyancer involved will need a closing statement to receive the bonus.
The ISA provider/manager will provide the closing statement so long as everything is done correctly.
In the event that the homebuyer losses their closing statement, the ISA provider will be able to give a new one upon request.
There is one exception in place where a closing statement is not needed.
An “expedited bonus application process” can be followed by the solicitor or conveyancer involved but this can only be done if a completion is imminent.
There are also procedures in place for handling bonuses and payments if a property purchase eventually falls through.
Under the scheme’s rules, a person has the right to reopen their account if the property purchase fails.
If this occurs, the purchaser must present a “purchase failure notice” to the ISA provider.
The account must be requested to be reopened within 12 months of the closure date and this specific date can be found on the closing statement.