For many First Time Buyers, purchasing a home may seem daunting and there are some parts of the process which we are often asked about. One of these is:-

“How do I claim my Help to Buy ISA bonus?”

By way of background, a Help to Buy ISA allows you to claim a free £50 bonus from the government for each £200 you have saved. This really is free and does not have to be repaid by you.

You can claim a bonus on any savings between £1,600 and £12,000, meaning you can claim a bonus of between £400 and £3,000. If you have more than £12,000 in your account, this is fine; however, you will not receive a bonus on the excess over £12,000.

The bonus must be used towards the purchase price on completion; it cannot be used as a deposit on exchange of contracts or for anything else, such as legal fees or Stamp Duty. This might seem complicated but do not worry, we will ensure the bonus is used correctly. Because of this, we often need to offer a reduced deposit in exchange for contracts. This sometimes causes confusion, as mortgage companies refer to the ‘deposit’ as anything other than the mortgage advance, but the deposit in legal terms, and what we mean here, is the amount paid at the time contracts are exchanged, which is never more than 10% of the purchase price.

Your Conveyancer will charge £50 plus VAT for dealing with the Help to Buy ISA admin and will deal with the bonus request for you. All you need to do is close your account, provide the closing statement to your Conveyancer and complete the First Time Buyer declaration which your Conveyancer will provide you with.

Your Conveyancer will need your account closing statement to request the bonus funds before completion. We recommend that you close your account and let your Conveyancer have the closing statement before the exchange of contracts, in case there are any delays with the bank. This is very important because the bonus cannot be claimed after completion.

No new Help to Buy ISA accounts can be opened (since 30 November 2019), however, if you have an account open you can keep saving in the ISA until 30 November 2029. Furthermore, you have until 1 December 2030 to claim your bonus, so it is worthwhile to keep saving even if you do not have any immediate plans to buy your first home.

There are also other schemes in place to assist with property purchases such as Lifetime ISAs, Help to Buy equity loans and shared ownership schemes.

If you have any questions about these schemes, Help to Buy ISAs or property purchases in general, do get in touch.

Leanne Riches | Chartered Legal Executive

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