Q My son has saved £5,200 in a help-to-buy Isa and has put in an offer for a property with a purchase price of £126,200. The government bonus of 25% of his Isa savings will work out at a little over £1,300 after the interest he has received from the building society.
He has had an offer of a mortgage of £119,935, which is puzzling because after taking his Isa savings and the government bonus into account, he only needs a loan of £119,700 to be able to pay the purchase price of £126,200. The mortgage offer is £235 more than he actually needs.
The other thing we’re not sure about is whether, because the purchase has rolled on a little longer than anticipated, he could should add another £200 to his Isa (for September). If he did do this – just before requesting his Isa completion statement – there would be another £250 added to the above sum, making a total of £126,685. So after the £126,200 has been paid to the seller, there will then be a small surplus of just over £485. Is it all right for this small surplus to go towards the solicitors’ fees?
We have scoured the internet, and everywhere it says that the government bonus cannot be used for the “deposit at exchange” and that the government bonus cannot be used for solicitors’ fees and stamp duty. But we are not sure if the money saved in the Isa by the individual can be used for the solicitors’ fees or whatever. Could this small surplus, which could be deemed his Isa savings, be used towards the solicitors’ fees?
He has asked his conveyancer, and she has tried to look it up, but she is not sure what the position is. She has advised my son not to add any more to the Isa fund this month; but for him, obviously, to add £200 and get back £250 in a week or so’s time seems a useful thing to do. After all, every little helps when you are buying a property.
A Despite a thorough trawl of the internet, I, too, was stumped until it occurred to me that the small surplus would not be deemed Isa savings. If every last penny of your son’s Isa savings and the government bonus is put towards the purchase of the property – as it should be – then the small surplus is created by the mortgage lender advancing more cash than necessary to complete the purchase.
I’m guessing that the £235 difference between the mortgage offer and the size of loan your son actually needs could be down to the fact that there was less than £5,200 in the Isa (which his lender would have looked at) at the time the offer was made. So it might be worth going back to the lender to check what it will actually advance when the purchase is completed.
As far as adding September’s £200 allowance to the Isa goes, I think I agree with your son’s conveyancer. Despite missing out on the £50 bonus, he’d be better off keeping the money to go towards his legal costs – especially if his lender does decide to advance only what is required rather than the amount offered.
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