Help to buy ISA

[Skeeter]

Yeah. Between us were currently putting about £1000 a month away, and earning 2.4% after tax using Santander accounts. Interest is paid monthly and we dumped all our savings in there at once and got interest immediately.

This ISA would have been good 5 years ago, but its way to late now.

 

[Ging3r]

And the fact that its more of a slow savings rather than putting as much in as you can

But isn't that the whole point of it? If you've got large savings then you're obviously well on the way to having a reasonable deposit, but for many people slowly starting to save for a deposit may give people the chance to start an ethos of saving rather than spending ever penny they can and getting into huge amounts of debt?

Maybe not though...just a thought

 

[Skeeter]

£200 a month isnt going to get you far though. It's a bit of free money, so better than a kick in the teeth, but its got catches that mean it could be barely worth it.

 

[skippy2421]

£200 a month isnt going to get you far though. It's a bit of free money, so better than a kick in the teeth, but its got catches that mean it could be barely worth it.

I really fail to see how it would not be worth it if you're planning on buying. If you want to save more, put it in another savings account? I don't see any other product out there that will match that sort of return without some level of risk attached.

 

[ViZioN8]

Yeah I was looking at setting one up, the limit is frustrating as we plan on buying in the next year so wouldn't really get much in it

We're in the same boat but the bonus will likely still be more than you'd get sticking it in a savings account, even after deducting the fee at the end.

 

[Skeeter]

I really fail to see how it would not be worth it if you're planning on buying. If you want to save more, put it in another savings account? I don't see any other product out there that will match that sort of return without some level of risk attached.

The 25% or the 4%?

The former, of course that's an excellent return but its dependant on a sub £250k house, which in 5 years is going to be impossible for a lot of people.

The latter, 4% on £2,400 a year, or £96, falls into my 'barely worth it' bucket. You can get 2.4% elsewhere (£57.60) so your earning an extra £38.40 a year, and it will cost you £60 to get the money out at the end. After 5 years your £132 better off..

 

[skippy2421]

The 25% or the 4%?

The former, of course that's an excellent return but its dependant on a sub £250k house, which in 5 years is going to be impossible for a lot of people.

The latter, 4% on £2,400 a year, or £96, falls into my 'barely worth it' bucket. You can get 2.4% elsewhere (£57.60) so your earning an extra £38.40 a year, and it will cost you £60 to get the money out at the end. After 5 years your £132 better off..

Fair one, probably not so great for those london commuter belt dwellers but that of course does assume that that limit will not move over time or come the next election.

Way I see it though is if you're looking to buy in 5 years then good luck. I feel really sorry for the younger generation to be honest because with this current trend of rising house prices I really can't see how many of them will be able to buy. I guess shared ownership will take off by that point.

 

[Skeeter]

If you can get in under £250k then there is money in this for you. You need to be putting more than £200 away each month though so this needs to be part of a range of savings products your using.

But as you say, houses are soooo expensive. My view is obviously skewed by living in eye wateringly expensive Surrey, but there is an increasing number of places where £250k doesn't get you much, and in 5 years time it's only going to be worse.

 

[Mucky_Pup]

I've opened one and my fiancée has opened one too.

 

[skippy2421]

If you can get in under £250k then there is money in this for you. You need to be putting more than £200 away each month though so this needs to be part of a range of savings products your using.

But as you say, houses are soooo expensive. My view is obviously skewed by living in eye wateringly expensive Surrey, but there is an increasing number of places where £250k doesn't get you much, and in 5 years time it's only going to be worse.

I sympathise, it was the main reason I moved jobs from London. It was either cough up silly money which my salary alone probably wouldn't get the mortgage for or face a long commute and the associated fares. Though if I'd have used my loaf I'd have gone north properly where it's cheap (unfortunately full of northerners though).

Even round here where I'm looking at around 160-170K for a decent 2 bed house. that'll be 200k in 5 years! Even if you did scrape up 20K deposit you'd still need to have an income of 40-45K then. I just don't see wages keeping up. On that happy note I think it's time for me to go find some beer!

 

[Skeeter]

Tell me about it. We recently had a house purchase fall through (first time buyers) that we were maxed out to afford. But because we stopped saving for a while the housing market has accelerated away from us faster than we can keep up, so what we were able to afford 6 months ago is now out of our price range! House prices are rising at 7% a year, but my salary certainly isn't!



At least beers still affordable.

 

[413x]

I've set one up. The killer is the 200 a month
It needed to be more.
I can understand why it's not 1000 (as of you have that spare you don't need 'help to buy' a home

But 400 or even 300 would be nice
I have put in my 1k and set up my 200 order. I'll probably only get to June before in ready. But I'm only looking at a cheap place. I'll be well under the limit

The 200 a month means you absolutely would never get anywhere if you don't use other savings

I'm putting away 800 a month in total now I'm single but I suspect all I cab reasonably aim for is an ok 2 bed for 140.

 

[Robi]

You can have one each.

It's a totally garbage token gesture - the saving limit of £200 a month is pathetic and basically ruins it as a concept, but you might as well have one anyway.

What is it they intend you to buy with savings of just £200 a month anyway, a new sofa?

Please explain why it's garbage?

Even for an individual buying a house in the next 12 months, you'll still get an extra £600 at the end of it, all for two minutes work; completing an online form and setting up a standing order.

It works for me. I already have the majority of a deposit saved up, but I'm waiting for another 12 months until buying. I'll use the Help to Buy ISA to compliment my existing monthly saving - so it's a win win situation really.

 

[JayMax]

The Government yet again meddling with a "free market" to keep the bubble (and happy voters) going imo.
The housing market needs a serious downward correction. It'll all end in tears.

 

[The_Abyss]

If you can get in under £250k then there is money in this for you. You need to be putting more than £200 away each month though so this needs to be part of a range of savings products your using.

Exactly. It is a lot better than a kick in the teeth, as you describe it. It is better than most available cash savings accounts.

But as you say, houses are soooo expensive. My view is obviously skewed by living in eye wateringly expensive Surrey, but there is an increasing number of places where £250k doesn't get you much, and in 5 years time it's only going to be worse.

That may be the case, but that's not the fault of the help to buy ISA. You still need to save if you want to buy a house, and this ISA should be close to the top of the list for doing so. Whatever's happening to house prices doesn't change that fact.

The complaint that house prices are inaccessible and getting more so may be valid, but that doesn't change the validity of using the ISA to save towards a purchase.

 

[DJMK4]

So for people who are looking to purchase end of this year or beginning of next is there any point in putting a deposit in this plus 200 just for the 4% and will I get the bonus? Its a bit of a pain as I would rather have my savings in one place earning.

Iv got around 700 per month to save

 

[VincentHanna]

Absolutely, you get the 25% bonus after just 3 months (or 32 days if you are really savvy)

So basically anyone buying a house soon, that is within the price bands (450k London/250k elsewhere) should open one of these.

 

[DJMK4]

Really? Thought the bonus was when you use what you have saved for a deposit? Which is why I was asking as if I can only save £200 with this account I am going to have to have another savings

Then come buying time take it out, combine with my other savings and use it as a deposit

 

[VincentHanna]

You dont take it out, a solicitor will apply for the bonus when you are in the process of buying the house.

You can put other money towards the house from other sources Inc standard savings accounts.

 

[DJMK4]

No probs.

Just spoke to Halifax. Your not allowed to have any other cash isa to pay in to bar this one. You would have to have regular savings or stocks isa.

Basically they said a lot of people are maximising this savings account and sending the rest elsewhere

I can close down the one I created on 5th Dec and open a new one as iv not put anything in to it

Suppose to get 4% and the bonus its ok. But equally annoying as you have to split your money.


The bonus on a years worth it savings

1200 initial deposit
200x 11 monthly payments

Total around 3400 after 12 months

Bonus around 850 ish ? Then the interest

Is what I am seeing, they could have done better and got a scheme together for those that want to buy sooner rather than 5 years also.