Help to buy ISA & Money Saving Advice

[abillybob]

Hi Guys

 

So I'm a little confused and I thought I had it all worked out. Basically I have saved around £11,000 for a deposit on a house. For the last year the whole amount has been sitting in a Cash ISA that I've had for years, I got sent a letter the other day explaining that my Cash ISA will be going down to 0.25% interest which is damn right awful and since I haven't had a good look around at the deals out there for a long time I decided to do some research and get my money into the best possible accounts that fit my needs.

 

What I have done since then is open a Club Lloyds account which gives me 4% Interest maximum on a balance up to £5000 so I dumped £5000 into that account and will let it whirl, it also gives me various other benefits that I felt where good personally for me and I don't have to pay the £5 membership fee as I deposit more than £1,500 into the account per year plus have 2 direct debits one for a car loan and another for my mobile phone contract so I was eligible... Win, Win. I did look at the Santander 123 account but this seemed too much hassle to understand and keep track of to get the full benefit out of the account so I didn't bother.

 

I then saw these new Help to buy ISA's that offer 2% interest per year and a 25% bonus, only catch being you can only pay in £1,200 on the first month and a maximum of £200 every other subsequent month. After sorting the figures it was a no brainer so I went ahead to apply for the Help to buy ISA although was informed by my bank that I have already been paying into another Cash ISA. Can I just scrap the old Cash ISA account and open this Help to buy account or have I got to wait until the new financial year?

 

Confused - I also moved all the money out from my current old cash ISA into my club lloyds account thinking I could just close the Cash ISA account now as it had no money in it and open the help to buy one but it still alerts me with the same message and now I'm worried I won't even earn interest on my old Cash ISA account as I have moved the money out of it.

 

Is anyone out there clued up enough about all of this to be able to help me out?

 

Thanks people!

[m25man]

Unless your a higher rate tax payer whom as built up a considerable ISA pot over the years the Tax Free advantages of an ISA are negligable.

 

Even the Help to Buy ISA has all sorts of conditions attached but if that's what you really plan to do and can be certain you won't touch it until you buy your home it's not a bad idea.

 

Earning £25 pa on £10k is a joke and your wasting so much time and effort trying to squeeze blood from a stone you are probably better off buying Premium Bonds!

 

Your money is safe, you can cash them out at any time with no loss and it's like buying 10,000 lottery tickets every month but keeping your stake money!

 

S&S ISA's can make good money but only if you can spend hours a day working the markets or buy funds and pay others to work it for you...

Unless your a serious player stay away from Stocks and shares ISA's give these a wide birth.

 

Do look at Peer 2 Peer lending.

These can be a very good yield I have several and some earn in excess of 6% and pay monthly but again the downside is you may have to lock money in for years to get a good return.

 

So, in summary

If I were in your shoes and want to save towards a house knowing what the return and bonuses will be, you can normally "Transfer" your current Cash ISA pot to a new Help to Buy one (subject to terms) and keep topping it up.

Interest rate is an insult but your real gain is being paid when you buy your 1st house by HMRC

This ISA is absolutely useless if you do anything else though!

 

Plan B

Premium Bonds.

Whilst there is never any guarantee to winning in my own personal experience our close family generally banks a cheque every month from the NS&I

We all have accounts and in general the returns have been consistently above base rate and tax free.

 

Unfortunately the ship has sailed when it comes to ISA's it's now a case of picking the best of a bad bunch.

[CAM]

Low interest rates have caused ISA's to lose their appeal. You can get higher rates but you need to arrange this with your bank.

 

Basically, you can only open one cash ISA per year and each has a limit as to how much you can put in it per year. You put money in and you can remove it, but the limit doesn't go back up. So if you can put £10k in and deposit £5k your remaining limit will be £5k. Remove £1k from the account and you will have £4k in the ISA but the limit remains at £5k.

 

When the ISA expires, the interest rate falls to super-pitiful rates but the limits remain in place. You look around and speak to various banks and opt for their ISA package if you like it. Alternatively, speak to your current bank and say you want to re-open your existing ISA as a new cash ISA which uses up your 1 account per year limit. You can hold multiple ISAs but it's best to keep your money in one account with a better interest rate than multiple accounts with rubbish interest rates.

 

Here's the important part. Never withdraw money out of the old ISA and put it in the new one if you switch to a new bank. This will remove funds from the first ISA and use up your deposit limit in the new one immediately. You then won't be able to save anything for a whole year and the old balance has used up your deposit limit. Instead you transfer the balance of the old ISA to the new one using the bank's processes. This way you aren't starting from zero, have all your money in the new ISA at a higher rate than the old one and have your full deposit limit to save for the year. You don't have to worry about this if you re-open your existing ISA as the funds don't have to move anywhere and they simply up the interest rate.

[zag]

You can only put a certain amount of money into an isa each year.

 

Just wait for april then you can open the help to buy isa no problems.

[JoeBloggs]

Move your money into other accounts such as the Santander 123 accounts.

 

Close your ISA just before April and open up a Help to buy ISA and put the max in as you can initially, then monthly.(if you close your Cash ISA at any point they will send a cheque for the interest you have earned) Have this as your only ISA as you can't pay into more than one in a financial year.

 

Santander have 3% interest on £3k-£20k but charge £5 per month. But with £10k you should make nearly £20 a month profit.

 

Halifax Help to buy ISA was 4% I think? Just remember you get charged for paying in more than £200 a month (a part from the first month where you can put a lump sum in) with a HtB ISA.

[abillybob]

Thanks all it was very helpful! So because I've moved out the money from my current Cash ISA are you saying that I have now lost the interest I could have gained on that!?

[JoeBloggs]

Thanks all it was very helpful! So because I've moved out the money from my current Cash ISA are you saying that I have now lost the interest I could have gained on that!?

 

No you'll what you have earned at the end of the tax year

[zag]

Thanks all it was very helpful! So because I've moved out the money from my current Cash ISA are you saying that I have now lost the interest I could have gained on that!?

 

Never move money out of an ISA. Its a use it, or loose it system. Its tax free for life not just one year.

 

You may be a higher rate tax payer in 5 years time and interest rates may be 5%. You never know

[m25man]

Help to buy ISAs have some stupid headline rates 3%

Then you find they are restricted to £1250 in the first month and £200 per month thereafter!

To move £10k across to a Help to buy ISA could take years!

H2B ISAs are ideal for young couples starting from scratch and looking ahead but for someone already with funds invested it's not much help.

[abillybob]

Help to buy ISAs have some stupid headline rates 3%

Then you find they are restricted to £1250 in the first month and £200 per month thereafter!

To move £10k across to a Help to buy ISA could take years!

H2B ISAs are ideal for young couples starting from scratch and looking ahead but for someone already with funds invested it's not much help.

 

That doesn't worry me as I'm not in a rush to gain the 2% rate. I'm looking more towards the 25% bonus that they give you as I will be buying a house with my savings anyway.

[m25man]

I can't see anyone allowing a Transfer in to an H2B and any withdrawals appear to affect eligibility for the Goverment bonus!

These ISAs are only going to appeal to a very specific group of savers.

[LincolnE]

What I've heard about the help to buy isa is that it's incredibly complicated once your in a position to use it (Well, not for you, but for your solicitors looking into it). Expect to be paying them a bit more for the privilege for the all the various forms they need to fill in to actually release the money.

 

(Don't hold me to this, only what I've heard from other people looking into them)

[JoeBloggs]

Well me and me GF both have HtB ISAs and literally buying a house now. We've got the minimum you can take out at £1600 each and a bonus of £400 each. £800, our solicitor is charging us £50+vat to sort. So nice quick bit of cash for nothing really.

[michael2k6]

I've got a HtB with Halifax. They do 1k max buy in with £200 per month. You can only open one cash ISA per year which is why you have a problem. As soon as the new financial year hits, open a HtB ISA with 1k if you can and you're sorted. The reason I went Halifax is it's 4%.

[twin--turbo]

Just be sure if you open a H2B ISA that you have never owned property before.

 

Conveyancing on a H2B has to be done by a solicitor registered to do the conveyancing but it should not be more costly. They should handle the funds transfer at the point of completion as long as all the criterion have been meet...

 

I should be able to remember a lot more about them as I sat in a product launch planning meeting less than 3 weeks ago. But my mind was on the Buffet.

 

TT