Should you switch your Help to Buy ISA into a Lifetime ISA?

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MSE_Eesha
MSE_Eesha Posts: 162 MSE Staff
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This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.


Read Martin's "Should you switch your Help to Buy ISA into a Lifetime ISA?" Blog.


Please click 'post reply' to discuss below.
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  • MoneyWonder
    MoneyWonder Posts: 4 Newbie
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    If I switched my HTB ISA into a LISA, if I used the money for a house deposit, I understand the bonus counts. If I continued after using it for that. I.e. For retirement savings. Then do I continue to get a bonus on that too? I.e. Effectively 2 bonuses.
    If this is not the case, then would I be better keeping my HTB ISA to get the bonus for a house and then keep my LISA bonus for retirement?
    Thanks:cool:
  • MoneyWonder
    MoneyWonder Posts: 4 Newbie
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    Also, as I'm a 20year old full-time student. Would you recommend me sticking with these options, rather than say, high-interest earning current accounts? I am aware there is a significant penalty with a LISA for withdrawal not for retirement or house deposits. Do you think it'd be better for me to go with flexibility and accessibility to my cash over this scheme at my age? Thanks
  • shane80
    shane80 Posts: 4 Newbie
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    Me and my partner both have a H2B ISA with £4000 in each account, I am not planning on buying until next year so I know the lifetime ISA will be best for us but I don't like the stock lifetime isa options as they confuse me. I would just prefer a cash lifetime ISA and I could wait for a cash lifetime isa to be released however we will be looking to buy in April next year so I want to get the clock ticking straight away.


    This is what I'm planning on doing:


    1. Make last payment in H2B ISA on the 1st of April 2017
    2. Open Stocks Lifetime ISA and deposit £1
    3. I will then transfer stocks & shares lifetime ISA to a Cash Lifetime ISA when 1 becomes available (June?)
    4. Then transfer H2B ISA to the NEW cash lifetime ISA
    5. Deposit £4,000 in 1 lump sum into the newly created Cash Lifetime ISA


    Questions...


    1. Does the above process sound ok (within limits) or should we be doing something else?


    2. Does the 1 year rule for a lifetime ISA start again if I transfer a stocks ISA to cash ISA in June (or whenever a cash lifetime ISA becomes available) OR does it start from the original date that I opened the lifetime ISA?


    Thanks for any help, I don't want to make a mistake and miss out :)
  • Heroine86
    Heroine86 Posts: 9 Forumite
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    Hello,
    My first post in here so be gently.

    Shane80 im exactly in the same situation and Ive got the similiar questions. What I know is:

    I think Halifax will offer cash Lisa in April. Ive got help to buy with them and I can read when im logging into account that it will be available through them very soon. Try to wait like 2 weeks or so in April before you gonna put that £1 into stock & shares. Read carefully all the rules. It might be like a penalty for closing account to quickly. Who knows..
    If anything transfer your money on 3rd of April thats Monday :)

    My question:
    Help to buy Isa savings will be value as of 5th April. I was putting money away on 5th every month. If I will transfer money on 3 April will it affect my £200 limit? As if would count that towards March?? From what Ive read on htb isa rules "month" runs from 1st to last day of calendar month. And Halifax (Ive got help to buy with them) rule states: put before or on 25th every month. So... I guess im on a safe side??

    Thanks for your help.
  • HD2017
    HD2017 Posts: 6 Forumite
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    Heroine86, I think the announcement by Halifax was a rule change allowing transfer of funds without being penalised to a LISA account. If I remember correctly, It categorically stated Halifax at the time didn't offer LISA. But hey, I'm hoping Halifax or some other bank starts a cash LISA soon.
  • Heroine86
    Heroine86 Posts: 9 Forumite
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    Hello HD2017,
    You might be right. The thing is with banks.. "we not gonna offer lifetime ISA from 6 April". All right so from 7th maybe? It would be good to know what month. 6 April the whole things starts. I would like to open one in April or at least plans my moves ahead if thats not gonna happen. We know about one. Cash ISA from June - Skipton. But thats one. In J U N E.. :/
  • WillPS
    WillPS Posts: 3,474 Forumite
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    I'd be interested to know if the 1 year delay between account opening and being able to use the balance for a car resets when you transfer - do we have a definitive answer on that yet?
  • brynhh
    brynhh Posts: 45 Forumite
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    Hey all, I know many people have posted this same thing, but want to clarify that I've got the right interpretation of how this will work, after reading the articles and peoples posts. If anyone can confirm this seems sensible, it would be appreciated.

    So this is our current situation:
    • I've never owned, my wife owns a flat she's trying to sell asap.
    • We currently have a HTB ISA and regular savings (I'll call this RS) account.
    • End of each month (on pay day), I transfer whatever we have left from our pay after bills and spending into RS, on average about £1000.
    • Once a month, I standing order 200 from RS into HTB.
    • RS balance is 5263.
    • HTB balance is 3886.

      Note: RS doesn't really gain us anything, it's just used to separate our money from that used for bills, spending and ISA.

    We're currently renting and need to move in May, so will be contracted until next May, at which point we'll then look to buy whenever is possible after that.

    So this is what I think is our best option is, as it maximises any bonuses and interest from ISAs, plus keeps some money open in case we need it, rather than all locked into LISA.
    • Leave RS and HTB as they are.
    • Open a LISA asap in April, putting £1 in.
    • Continue to transfer remaining monthly cash as is (£800 into RS, £200 into HTB) up to and including next March.
    • End of March 2018, move 6286 from HTB into LISA (existing 3886 + new 2400).
    • End of March 2018, transfer 1600 from RS into LISA to make up to that years 4000 allowance.
    • From April 2018 on, transfer all remaining monthly cash into RS.
    • Transfer 4000 from RS into LISA once per tax year, until we're ready to buy.

    Cheers, James.
  • Heroine86
    Heroine86 Posts: 9 Forumite
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    Hello James,

    Your saving from HTB will be valued on 5th April. So for example: you will have 4086 on 5th April 2017 -> March 2018: you can tansfer money to LISA as they were valued on 5th April 2017 so: 4086. Here is some gov. site to back this up. Choose second pdf file:
    gov.uk /government/
    publications/
    design-of-the-lifetime-isa-technical-note[/

    Sorry for pasting link like that as a new user I cant do it other way..
  • mlb1984
    mlb1984 Posts: 8 Forumite
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    Re opening the LISA with a pound and continuing to contribute to the HTBISA, isn't there a rule that you can't contribute to more than one ISA in a tax year? Would the pound need to come from an existing ISA transfer or doesn't the rule apply to LISAs?
This discussion has been closed.
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