Lifetime ISA Monthly Bonus Advice

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feely83
feely83 Posts: 5 Forumite
in Savings & investments
Hi all
My husband and I intend to buy a house towards the end of next year when we have a good deposit saved. We have both opened LISAs with Skipton and intend to put the £4000 in around the start of March 18 to maximise savings in another account as Skipton are only giving 0.5%. I think this is the right thing to do, can someone advise if not?
Secondly can someone confirm if we are still allowed to put the £4000 in before March even though the accounts did not open until early June?
Thirdly and lastly after April/May 2018 it states that bonus is paid monthly - would we be wiser to put the £4000 for 2018/2019 year straight away or how will this monthly bonus be calculated? We then plan to be buying the house around September 2018 so we want to maximise the amount we can get from the LISA by this time.
Thanks for all your help :)

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  • Ed-1
    Ed-1 Posts: 3,892 Forumite
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    feely83 wrote: »
    Hi all
    My husband and I intend to buy a house towards the end of next year when we have a good deposit saved. We have both opened LISAs with Skipton and intend to put the £4000 in around the start of March 18 to maximise savings in another account as Skipton are only giving 0.5%. I think this is the right thing to do, can someone advise if not?
    Secondly can someone confirm if we are still allowed to put the £4000 in before March even though the accounts did not open until early June?
    Thirdly and lastly after April/May 2018 it states that bonus is paid monthly - would we be wiser to put the £4000 for 2018/2019 year straight away or how will this monthly bonus be calculated? We then plan to be buying the house around September 2018 so we want to maximise the amount we can get from the LISA by this time.
    Thanks for all your help :)

    Right - first you need to fund the LISA with £1 immediately as the LISA is not classed as 'open' (for HMRC reporting purposes and therefore the 12 month clock until you can withdraw penalty-free) until it's been funded.

    You can fund the LISA at any time up to the £4,000 limit.

    The bonus is calculated as 25% of the amount paid in the previous period where the period for 2017/18 is the tax year and the period for 2018/19 onwards is the previous month. So by funding it early in 2018/19 you'll get the bonus earlier.
  • feely83
    feely83 Posts: 5 Forumite
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    Hi there, thanks for this, we both opened them with £50 so the 12 month clock would start. Really appreciate your advice re: the 18/19 bonus, we'll deposit all of our 18/19 £4000 in April then. Thanks again :)
  • isasmurf
    isasmurf Posts: 1,999 Forumite
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    I'm not sure that depositing the £4000 in April to get the bonus earlier is the best strategy. £4000 at 1%+ gets more interest than £5000 at 0.5%.
  • feely83
    feely83 Posts: 5 Forumite
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    Forgetting Skipton's awfully poor 0.5% though, won't the £4000 in from April receive the government bonus of 25% monthly or 25% (£1000) /12 = £83.33 per month whereas if I don't put this all in straight away the government bonus will be much less by the time I want to withdraw in September? I may be taking this up totally wrong - let me know if so.
    Thanks
  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    feely83 wrote: »
    Forgetting Skipton's awfully poor 0.5% though, won't the £4000 in from April receive the government bonus of 25% monthly or 25% (£1000) /12 = £83.33 per month whereas if I don't put this all in straight away the government bonus will be much less by the time I want to withdraw in September? I may be taking this up totally wrong - let me know if so.
    Thanks
    No, the bonus is paid in full after contributions (not spread out over multiple months), so if you put in £4K anytime in the 2018/19 tax year you'll get £1K bonus the following month. So, isasmurf is correctly pointing out that you might as well earn higher interest on your £4K elsewhere and then pay it in to your LISA not long before you want to withdraw, as this will give you a slightly better return.
  • feely83
    feely83 Posts: 5 Forumite
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    This makes much more sense. Thank you so much for your help.
    Vera
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