Getting a loan for...

[Arsonist]

So I need a new car and have decided to take out a small loan to cover the cost plus insurance etc.

I only really need 2-3k for the car I want, which I can pay back within 2 years with no issue, but I'm also wanting to start a Help To Buy ISA to get a mortgage together.

How 'legal' is it to take out a loan of say 4k and immediately dump £1200 (maximum amount you can put in a HTB ISA for the first month) into an ISA?

I can borrow 5k for £5200 over 2 years, so essentially costing me £200 over 2 years, but the 'government' top-up of 25% (when finally cashing in on a deposit) would already be £300 - so in a way, actually being given £100 to borrow 5k...

Does anybody know how legal this is to do?

Ta

 

[Arsonist]

If its a personal loan, you can do whatever you want with it but, to be effective, the savings interest rate needs to be higher than the loan rate

I'm looking at loan rates of about 4% and ISA rates of about 2.5% - however the £300 government money gained immediately on the £1200 add up to, in theory, 27.5%. So as long as I'm not going to get chased by HMRC etc then this looks like a winner!

 

[Arsonist]

Hello all, thanks for the replies.

Just to clarify - I know that the government ISA bonus is only paid on completion and payment of the deposit. I also said I wanted to put £1200 in the ISA immediately. I didn't mean for it to just sit there, I will add the maximum amount to it each month going forward. It just means I will reach the 12k limit (qualifying for 3k bonus) in 55 months and not 60, so can potentially buy a house 5 months earlier. Maximising cash and all...

I also want a personal loan as it's much easier to deal with 'cash' than a credit card as this will be going on a few other small bits where a credit card might not help.

Cheers again for the help!