Month: December 2017

Ahh I’m drowning in ISAs

ISA (Individual Saving Account)

Up until about 5 years ago ISAs seemed pretty straight forward. There were 2 options (as far as I’m aware), there was either a Cash ISA, which your local bank or building society would offer or a Stocks and Shares ISA, which would be offered by brokerages. However, over the last 5 years it appears these ISAs have multiplied like rabbits and now it feels like untangling a bowl full of spaghetti when attempting to figure out which ISA right for what job.

Well if the conundrum of which ISA to open or contribute to this tax year has been keeping you up at night (and I’m taking a wild guess that it probably hasn’t), then don’t worry, we’ll go over what is currently available and when which ISA is best for what job. Now come on, together, we’ll get through this.

ISA Advantages

At the moment it’s simple, any gains on the money within an ISA (sometimes also referred to as a tax-wrapper, this isn’t someone who raps about tax) are currently protected from the tax man. There are other advantages which we’ll go over in the table below.

ISA Type Restrictions Best For Yearly Limit Benefits
Cash ISA Building up cash savings. 20,000 Interest earned on savings is not taxed.
Lifetime ISA Can only withdraw money for house purchase or retirement.

If using this for retirement savings, money cannot be withdrawn until age 60.

Saving for a house or retirement. 4,000 Government tops up amount by 25%. So you put in £4,000 and the Government will add £1,000.


Help to Buy ISA Can only be used for buying your first home. Saving for a house deposit.


Maximum of £200 per month contributions.

In the first month of opening you can deposit £1,200.

The Government will top up the ISA when the ISA is closed for purchasing a house. The government top up by 25% of what is in the ISA up to a maximum of £3,000.
Stocks and Shares ISA Building up a shares/bonds/funds portfolio. 20,000 Any gains in value of shares or bonds are tax free. As are the dividends or interest which is paid to you.
Innovative Finance ISA Peer-to-peer lending 20,000 The money earned from peer-to-peer lending is tax free.


Scenario: Saving for a house

So you’ve got two options here, either the Lifetime ISA or the Help to Buy ISA, which is going to be best for you? Well you’re reading a HTSC post so we’ll get to the example.


  • Saving for 3 years (36 months)
  • Maximum contributions are made
ISA Type Contributions Total Contributions Bonus Total
Help to Buy ISA 1,200 x 1 Month

200 x 35 Months

8,200 2,050 10,250
Lifetime ISA 4000 each tax year 12,000 3,000 15,000

If maximum contributions can be made, the Lifetime ISA is the one to go with and even if you cannot make the maximum, it’s still the Lifetime ISA and here’s why. The Lifetime ISA has an age limit of 50 for when the 25% bonus stops being paid, where as the Help to Buy ISA will only pay a maximum bonus of £3,000. So there’s no point in saving into the Help to Buy ISA once you’ve saved £12,000.

If you open a Lifetime ISA and contribute the same as you would have if you opened a Help to Buy ISA, the bonus and total will be the same. It’s just the Lifetime ISA allows you to save more and in turn earn a bigger top up.


Scenario: I’ve budgeted like a pro and I’m sat on spare cash I want to get to work

So you’re not happy with the Cash ISA return (of a pitiful 1%) and you’re happy to take on a little more excitement (read risk) in the hope of greater returns.

Now the Stocks and Shares ISA and the Innovative Finance ISA are not directly comparable as they are out there to satisfy different needs but here’s a quick rundown.

ISA Type Pros Cons
Stocks and Shares ISA Any gains in the value of shares and bonds bought is tax free.

Any dividends or interest paid is tax free.

There is an ongoing fee for having a Stocks and Shares ISA.
Innovative Finance ISA Any money received from peer-to-peer lending activities is tax free. There is an ongoing fee for having an Innovative Finance ISA.

Not many platforms currently offer this ISA.

The Innovative Finance ISA is the new kid on the block and it’s out there to satisfy the growing demand of people wanting to loan out their spare cash to other people or businesses. This is known as peer-to-peer lending or crowd funding. More information can be found here: MoneySavingExport – Peer-to-peer lending

There are not a lot of platforms out there that offer the Innovative Finance ISA but one list I’ve found is: 

So I hope that clears a few bits and pieces up and you’re able to determine which ISA is best for you. I’m sure in years to come there will be even more ISA options out there, which will no doubt add to the confusion but don’t be afraid, as we’ll tackle each ISA as it is released into the wild.

As always, please do further reading when it comes to finance. The topic of ISAs is a large one and cannot be fully understood by reading one blog post by a guy on the internet. Happy hunting!

Buying a house – Conveyancing/Solicitors fees

One of the biggest fees associated with buying a house is the fee for employing the services of a solicitor/conveyancer. Sadly, this isn’t a fee you can minimise to 0 but by getting in contact with a couple you should end up with one that is a good fit for your bank account.

If you’re unsure what a conveyancer/solicitor does, a quote from MoneySavingExpert:

You’ll need to pay your solicitor to cover the cost of all the legal work associated with buying a home. This includes conveyancing (dealing with the transfer of ownership), checking paperwork is in order and checking whether environmental factors, planning permission issues or other hidden nasties could cause you problems.

The biggest bit of advice I can pass on is to get an itemised quote from at least 3 solicitors/conveyancers. This will give you an idea of what you’re dealing with. Don’t feel silly about ringing up and having to explain that you’re a first time buyer who doesn’t really know what he/she is doing (feeling way out of my depth is exactly how I felt when phoning for quotations). They’ve heard this a million times and the majority are more than happy to step through the whole process with you. Once you’ve got a number of quotes, you’re then going to know if one was potentially trying it on (especially if you tell them you’re a first time buyer, which you should). If they all come in roughly the same price, you’ll probably pick another factor like location of their office.

As is customary on HowToSaveCash, here’s an example itemised quote for a £200,000 purchase.

The largest item on the quote is the ‘Lands & Buildings Transaction Tax’. South of the border, it’s known as stamp duty. This is a fee which the government collects when a house is purchased.

I am not going to pretend to know what each item is, however, once you’ve got your 3 or 4 quotes, you will see similarities between them which you can go off and Google. For any items Google fails to return a meaningful explanation, you should be able to ask the solicitor for an explanation.

There is a potential to cut the total solicitor fee down a little and this is by dealing with the Stamp Duty/Land & Buildings Transaction Tax on your own. It’s not compulsory that the solicitor handles this, however there is a relatively short time frame in which the tax has to be paid once the purchase has gone through.

For our Scottish residents, more information can be found here How to pay LBTT

So, hopefully that wasn’t too painful. In theory, if you’re a first time buyer and you hunt around for a mortgage which doesn’t have any fees, plus you manage to cut your removal costs down to 0 by doing a little heavy lifting on your own and by blagging a van from work/friend/family member/neighbour, then the only bill that will need paying is the solicitor’s.

As always, if something in this post has peaked your interest then please do more of your own research. If you happen to have gone down the DIY route for paying the Stamp Duty/LBTT on a house purchase then I’d be interested in hearing from you about your experience.

Buying a house – The dreaded mortgage

The chances are, the biggest loan you’re ever going to have is a mortgage and that prospect puts many people off even attempting to do their own research and selecting a mortgage that’s right for them.


When looking for a mortgage the most important thing to remember is that what you’re after is essentially a big loan. Unfortunately, as it’s a financial product, there is some jargon involved which I’ll cover as we go on.

There are 4 important factors to take into account when looking for a mortgage:

  • Amount you want to borrow
  • Length of mortgage
  • Interest rate
  • Fees

Amount – This is pretty simple. The more deposit you have the smaller the mortgage, which in the long run is a win for you. So apart from saving more for the deposit, there isn’t much more we can do here.

Mortgage Length – This is going to depend on your situation. The shorter the mortgage length, the more your monthly payments are going to be, however in the long run you’re going to have paid less interest on the loan. Meaning you’ll be better off sooner. Now depending on the mortgage provider, they may allow over payments, which gives you the flexibility of over paying when it suits you. Overpaying will also shorten the mortgage length. Mortgage providers tend to gloss over any overpayment allowances/restrictions, this is because they don’t want you to pay it off any sooner but it’s definitely worth knowing this information.

Interest Rate – Each mortgage provider is going to be vying for your custom, so be on the lookout for a competitive interest rate. Now it’s important to understand it’s not just a case of going with the cheapest rate as there might be steep application/booking fees with the mortgage, which could mean you would be better off getting a slightly higher interest rate and smaller or no fees.

Fees – It would appear each provider uses its own terminology when it comes to fees but two of the main ones I’ve seen are booking fee and/or application fee. In my opinion, you should be able to get a perfectly good deal without paying any fees at all. You just have to do a little digging.

The MoneySavingExpert has a great first time buyers guide which breaks down the fees which may be applied.

Ok, enough babble, example time.


Mortgage Required £150,000
House Value £170,000
Mortgage Length 25 Years
Mortgage Type 2 Years fixed interest rate

Using the excellent MoneySavingExpert mortgage comparison tool, it’s come up with two mortgages which look similar but have a very big difference.

The initial interest rate on offer is nearly the same 1.90% vs 1.93% (this is the interest rate you’ll be paying on the loan for the first two years) and the monthly mortgage payments are similar £628 vs £630. However, there is over a £10,000 difference in the total amount payable (highlighted in the red boxes). This is down to the fact that after the 2 years, the mortgage provider will put you onto their Standard Variable Rate (SVR), which is usually much higher than the rate you first get. The SVR for the first mortgage is 5.49% vs 4.99% on the second mortgage. Now, 0.5% doesn’t sound like a lot but over the 23 years you’ll be paying back the mortgage, as we’ve seen, it will add up to over £10,000 more being paid for the same mortgage. I don’t know about you but I’d definitely prefer that £10,000 stay in my pocket rather than someone else’s.

Now in reality after the 2 years you should be looking around to see what mortgage providers are offering for another fixed term. Invariably, these interest rates will be cheaper than the SVR so it’s a must do when your fixed term comes to an end.

This example uses just the one online tool. However, make sure you use a number of online tools as not one tool will cover all the mortgage providers out there.

You might be wondering, hey, just above you mentioned something about fee free mortgages, where do I get one of those? One provider that has them is HSBC, using the same details as above, HSBC’s online mortgage comparison tool presented this mortgage:

As we can see, the initial interest rate is higher than the 2 previous mortgages at 2.34% however the SVR you get put on after 2 years is 3.94%. That is significantly lower than the first two we looked at which were 5.49% and 4.99% respectively. So in the long run, your total amount payable would be much lower with the mortgage from HSBC. This mortgage doesn’t have any fees either compared to the £1,414 and £999 set-up fees of the previous two mortgages.

As always, do your own research and calculations when it comes to this as everyone’s situation is different.

Mortgage Advisor

Now I’m not saying that a mortgage advisor isn’t worth it, if the above scares you then don’t feel silly about arranging to use one. I know many people who have had one and they have been very happy with the service they have received and the mortgage they have ended up with.

The first question you’ll want answered is how is this advisor making a living? Some brokers charge a flat fee to find you a mortgage, some charge a percentage of the mortgage value (avoid at all costs, the paperwork for filling out a mortgage cannot be that much different when wanting £100,000 or £300,000) and some don’t charge a fee. Those that don’t charge a fee tend to get a kickback from the mortgage provider for sending the business their way.

They will all no doubt advertise they search the entire market but I highly doubt they do. Admittedly there are mortgages that can only be obtained with the use of a broker but having seen the interest rates on offer direct from mortgage providers, I highly doubt a broker can do much better in terms of the initial interest rate and fees.

I’m hoping you’ve found this useful and it’s given you the confidence to go off and do more of your own research and to select a mortgage that’s right for you (not your broker). I’m also hopeful that in the long run, this will help keep more of your hard earned cash in your pocket.

Our next stop will see us look at the solicitor/conveyancer fees that come with a house purchase.

Buying a house

I’m going to do a couple of blog posts around what is probably the biggest purchase(s) of our lives. Buying a house. The majority of folk in sunny Blighty have this burning desire to own their own home as many see renting as ‘throwing money away’ or ‘paying someone else’s mortgage’. Now I can’t argue with the second point, that’s a fact, if you’re renting you probably are. But the first may not be so true.

Consider the advantages of renting. If anything in the property goes awry, it’s a simple call to the landlord or letting agency to get them to organise someone to come and look at the problem and fix it. Now, this doesn’t sound that advantageous but consider a boiler breaking down and a new one being required. It’ll be down to the landlord to part with around £2,000 – £3,000 to get one fitted, not you. There’s also the flexibility of moving to a different part of the town/city/country with minimal hassle, just hand in your notice to leave and away you go.

On the opposite side of the coin, many people consider the biggest advantage to owning a property is that you’re paying into something. Although true, I don’t see this as big a deal as most people. Yes, correct, you are slowly paying off the loan the nice bank or building society has given you but when you come to the end of the mortgage and you’ve paid it off, you are basically sat surrounded by walls of money which you cannot spend. True, you can move and downsize to free up some of that money but I’m sure when you’re into you 50’s and 60’s, moving house probably doesn’t seem that appealing.

It’s true that by buying a house, the mortgage payments will (in theory) go down (but don’t bet on that now as there is no where for interest rates to go but up), so as time ticks away, each month’s payment will be smaller until you’re done. This is what most people are aiming for as they can’t see how they would be able to pay rent once they’ve retired. Or they don’t want to spend their entire pension on rent, which is fair enough. However, I’m hoping you’ve realised, that if the previous blog posts are followed, you budget, save and invest. You can calculate roughly how much you’re going to need to invest for those investment gains to sustain you for the rest of your life!

Slightly off course there so back to what we do around here, how to save cash. The next posts are going to be on the following topics:

  • Mortgages
  • Conveyancing/Solicitors fees
  • Fees to watch out for

We’ll look at how to minimise fees and I’m hoping the posts will give you the confidence to DIY instead of leaving these up to someone else to sort out for you at a price.

I’ll be talking from experience here, having recently gone down the DIY route as much as possible when buying a house here in bonny Scotland.