HELP TO BUY ISA BONUS SCHEME
This bonus scheme was introduced at the end of 2017 as a way to assist first time buyers who are buying a property with a mortgage, and to encourage people to save for their first home.
Individuals need to open a dedicated ISA account with a bank or building society and can save each month until they need to use the funds. In short, the government will pay a bonus of 25% of what you save, so it can be very helpful to first time buyers. The maximum bonus payable is on £12,000 savings, being a Bonus of £3,000.
Once you approach completion of your house purchase you will need to arrange for your ISA account to be closed. Your solicitor will advise when you will need to do this. Your bank or building society will then transfer the balance to you and provide you with a Closing Statement. This document is likely to come in the post and it contains specific information that your solicitor will need, including the closing balance and ISA account details.
You will also need to complete and send to your solicitor, a First Time Buyer’s Declaration. This is a standard government document and is self-explanatory, where you confirm amongst other things that you have not owned another property before in the UK or elsewhere.
Once your Closing Statement arrives from the bank or building society, you need to send the original of this to your solicitor along with the completed Declaration and, via an on-line portal, the solicitor will apply for the ISA Bonus for you. Solicitors will need to be registered with the Conveyancers Help to Buy ISA Portal in order to act for you in processing requests for bonus payments for their clients.
The Solicitor will input the details and complete their own declaration confirming that the purchase price for the property being bought is less than £250,000 (£450,000 in London) making it eligible for the Bonus. The two documents that you will have supplied, will then be uploaded and the application sent off. Once the application has been sent, the scheme’s on-line administrator will confirm that it has been received and funds will be sent out on the requested date.
The on-line system usually needs at least a week to process this, so it is recommended that the process of closing the account etc is started about 3 weeks before completion.
On completion (or the date on which the funds have been requested) the 25% Bonus amount will arrive in your solicitor’s client account and will show on your completion statement as a credit. Funds must be used for the property purchase and cannot be requested retrospectively after the purchase has completed – so you must tell your solicitor at the outset, that you have a HTB ISA for which you expect to receive a bonus.
Should completion not take place within 3 months of receipt, the Bonus will need to be returned to the scheme administrator, so ordinarily the Bonus application will not be made until the completion date is quite certain, if not formally agreed.
Hand Morgan & Owen is registered with the Portal and we have completed many transactions of this nature. Any of our solicitors would be happy to discuss the process with you and to guide you through your purchase transaction.