Saturday, 30 April 2016

Help to Buy ISAs: How It All Works

I’ve never been overly-knowledgeable when it comes to matters of personal finance – too much talk of variable interest rates and AERs and I start to zone out.

help-to-buy-isa-mortage-help-imageIt’s quite contradictory really, as I’m quite a good saver and I generally have a clear idea of exactly just how much money is going in and out of my bank account. You would think I’d be keen to be banking-savvy to maximise my saving potential.

A guy I was formerly seeing introduced me to the world of ISAs, practically begging me to open one up. He went as far as to setting the whole thing up for me online.

And I’m glad/grateful he did, because I now earn an extra £100 a year…as opposed to the 0.02p I was earning from my savings before.

But now that time has come around again, as there’s a new type of ISA account on the market that I really need to brush up on.

This time I have my sister pestering me to set-up a Help to Buy ISA. Makes sense really, as the money in my current ISA is money being saved primarily for a deposit for a house (thank you Leeds and your affordable housing options).

With a Help to Buy ISA, you can put up to £200 into it each month. When you hit £1600, the government top up your savings with a 25% bonus (you only receive this when you’re in the process of buying a property). 

Most Help to Buy ISA providers will allow you to put in up to £1200 upon setting it up, which means you’ll hit the £1600 minimum (to receive the bonus) faster (after three months). 

This means that even if that’s all you put into it, you would receive an extra £400 to put towards your savings for a house. As generous as my current Cash ISA is, it’s nothing compared to that.

Unfortunately, when I popped along to my local branch to enquire about setting one up, the smug bank teller wasted no time in telling me that, because I already have a Cash ISA which has been active since the new fiscal year began, I can’t set another ISA up.

The annoying thing is the new tax year literally just began, at the start of this month. I got paid a few days ago and I only just transferred money into my ISA, the first transaction of this tax year…and therefore activating that ISA. 

If I hadn’t, I technically wouldn’t have subscribed to any ISA this year and I could have kept my current Cash ISA which is collecting money nicely, and I also could have signed up to a Help to Buy ISA.

So now I’m in a bit of a conundrum. 

Well not really, the Help to Buy ISA is still a no-brainer. But it means I’m going to have to look elsewhere. Very few banks or building societies allow you to subscribe to more than one ISA a year. 

However, NatWest will let me set one up on the condition that I transfer over my current ISA account to one of their savings accounts…including its sh*tty interest rate. It’s either that, or wait until next April to set one up.  

To be honest though, I do think it’s time to leave HSBC. I was temping when I first moved back to my hometown about a year ago and my earnings were a little…erratic. I didn’t appreciate the arsey letter I got from HSBC, informing me they would strip me of my current account benefits (What benefits? I thought), unless I paid in a certain amount of money within a set time. 

Pffft there aren’t many, if any, perks of having a current account with HSBC, so that was a bit rich coming from them. Their Indian call centre staff are always really helpful though. 

Slightly off topic here, but there’s a quirky busker who hangs out around the financial district of Leeds city centre, and just as I was pondering my afternoon banking experience, I saw this post online:

humans-of-leeds-imageI walked past him today on my way to the bank, and between the location and snotty attitude I bet he was talking about HSBC :D

I write about this because it’s good to be mindful of your banking options, especially as certain schemes have deadlines or restrictions which can affect your eligibility. Some banks are more helpful than others, but it’s still good to know all the variables so you can get the most out of your savings.  

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