LISA/HTB - what to do after April '18
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Kendog1
Posts: 1 Newbie
Hi,
I have been saving £200 per month into the Halifax HTB ISA and recently opened the Skipton cash LISA with £1 to ge the clock ticking. I'm a first time buyer saving for a property and won't be in a position to buy until well after April 6th 2018. Current advice on MSE suggests transferring the HTB ISA into the Skipton cash LISA just before the end of the current tax year to max out the contribution from the government on both amounts and this is what I will be doing.
However, given that I will still have a need to save for a property beyond this point, I'm struggling to find advice on 1) what happens / what I should do with the Halifax HTB ISA and 2) where is best to then continue saving for my first home.
Should I keep the Halifax HTB ISA open with £200 going in per month? Is this possible?
Thank you for any help!
I have been saving £200 per month into the Halifax HTB ISA and recently opened the Skipton cash LISA with £1 to ge the clock ticking. I'm a first time buyer saving for a property and won't be in a position to buy until well after April 6th 2018. Current advice on MSE suggests transferring the HTB ISA into the Skipton cash LISA just before the end of the current tax year to max out the contribution from the government on both amounts and this is what I will be doing.
However, given that I will still have a need to save for a property beyond this point, I'm struggling to find advice on 1) what happens / what I should do with the Halifax HTB ISA and 2) where is best to then continue saving for my first home.
Should I keep the Halifax HTB ISA open with £200 going in per month? Is this possible?
Thank you for any help!
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Comments
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As you can only receive a 25% government bonus on either the HTB or the LISA, most will opt for the LISA because of the higher contribution level possible - the interest rate is poor compared with HTB ISAs, but that's easily outweighed by the 25% unless you're saving up for many years.
You can keep a HTB ISA going in parallel with a LISA but this is only sensible if you'd be maxing out the LISA and need an overflow account for additional savings (that will earn HTB interest rates but no bonus) - you may find that it's better to open one or more regular saver accounts though....0 -
I too am in the same situation.
One thing that worries me is LISAs seem to have been a damp squib compared to the simple HTB ISA product for both customers, banks and the government.
The autumn budget is in 11 days. One can only hope the ISA products will get streamlined in a way that would avoid this HTB ISA / LISA situation.0 -
I wouldn't worry too much - tens of thousands of people have taken them out. Sure they might change but it's unlikely to be to your detriment. HTB ISAs are on a glide path to becoming retired products in the same way JISAs replaced CTFs and ISAs replaced PEPs and TESSAs.0
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I'm in the same position. I'm likely to be keeping my Lisa for a long time though. I have also read the advice on transferring the Htb to the Lisa. So I guess that will close the Htb and I will pay into the Lisa from then on**Debt Free as of 15:55 on Friday 23rd March 2012**And I am staying that way
377 166million Sealed Pot Challenge 2018 :staradmin No. 90: Emergency fund £637
My debt free diary http://http://forums.moneysavingexpert.com/showthread.php?t=36300990 -
If you are saving in a LISA for a property and its going to take a while then its tricky to decide if you want to stay in cash with the low rate erroding the bonus or take investment risk.0
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This interests me also as my brother & sister are in similar situations & often ask me for advice on where to put their money.
They're currently both with Halifax. One has maxed out the £200 limit throughout but the other pays what they can which is about £60pm. Thing is, the one paying in the max of £200pm can't put anything beyond that. £200 really is their limit.
Neither will be getting their own place in the next 5 years but possibly after that.
I think their Halifax HTB-ISAs are currently giving 3.50% but i don't think the highest cash LISA comes near that?
Who knows what that 3.50% will change to come April 2018 though.
I'm thinking they'd probably be better staying where they are in a HTB-ISA. Any particular reason they'd be better off moving it to a cash LISA under their circumstances?0 -
JustAnotherSaver wrote: »I'm thinking they'd probably be better staying where they are in a HTB-ISA. Any particular reason they'd be better off moving it to a cash LISA under their circumstances?
They wouldn't be better off if they can put more into a LISA as they'd get a bigger bonus.0 -
Are you just generally speaking? Did you skim read my post?They wouldn't be better off if they can put more into a LISA as they'd get a bigger bonus.
Anyway as said in the last post there, one is maxing out the HTB ISA of £200pm but can't contribute any more. Maybe i should've specified "can't afford to contribute any more" rather than can't contribute which may suggest that they want to. So there could be no ceiling to contributions & they wouldn't be able to pay in £200.01 if you get me?
Whereas the other doesn't earn enough to come close to maxing out a HTB ISA.
Based on these circumstances i was thinking it's best they stay with the HTB ISA as it offers a higher rate of interest, and providing they buy their first house before 2030 (is it?) all should be fine.0 -
Some factors for their decisions:
An advantage of the LISA is the higher property value cap outside London, i.e. £450K versus £250K with HTB - obviously nobody knows if those thresholds would be adjusted over the next five years but many have complained that £250K doesn't buy much in plenty of parts of the country....
Also, £200pm into a HTB ISA (plus an initial £1K) will fill it up to the point where no more bonus could be earned in (just) less than five years.
Finally, someone able to save £200pm in what's presumably early stages of their career will probably be able to afford to save more in a few years' time?0 -
Wouldn't apply in this case. A first timer house in this area doesn't sell for £250k, not unless you're on megamoney. They'll be looking at the £100k-£150k mark i'd say.Some factors for their decisions:
An advantage of the LISA is the higher property value cap outside London, i.e. £450K versus £250K with HTB - obviously nobody knows if those thresholds would be adjusted over the next five years but many have complained that £250K doesn't buy much in plenty of parts of the country....
This is the one that will probably make the difference. I'd forgotten about that point.Also, £200pm into a HTB ISA (plus an initial £1K) will fill it up to the point where no more bonus could be earned in (just) less than five years.
Since neither will be looking to buy their house any time soon (i'd say for both we're at least 5 years away) would it then be better to leave the money in a HTB ISA for as long as possible & then if the bonus max has been met, THEN pay in to a cash LISA (since HTB ISAs offer better interest) and then when it comes close to buying their house just transfer the HTB ISA money over to a cash LISA?
Would that be better?
Not likely.Finally, someone able to save £200pm in what's presumably early stages of their career will probably be able to afford to save more in a few years' time?
The one paying in £200pm is a driver. For them to really get more money (& therefore be able to save more) they would really have to do things like nights, which they wont do. They get paid the going rate for the job they do.0
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