Lisa and H2B question

I’m starting to save up for a deposit, I currently don’t have any savings but am moving back in with my parents and hoping to save £600-1000 a month.

Can I open a help to buy isa to get the better interest and a LISA to get the 25% bonus? If so then between the two of them I can put in about £550 a month so what is the best way to save the rest of the money? Or have I got this totally wrong?

Thanks and apologies if this is in the wrong place.

Comments

  • The answers are on this page moneysavingexpert.com/savings/lifetime-ISAs
    You're also allowed to have a Help to Buy ISA and a LISA, though you can't get the first-time buyers' bonus on both (see Help to Buy ISA vs LISA info below). But you could get the Help to Buy ISA bonus for a home and then use the LISA and its bonuses for retirement.

    But the way to pay into a LISA is different
    You can save up to £4,000 a year in a LISA as a lump sum or by putting in cash when you can. The state will then add a 25% bonus on top. So if you save £1,000, you'll have £1,250 and if you save the full £4,000, you'll have £5,000. And that's before interest or growth.
    The bonus is paid every year until you hit age 50.
    The first year's bonus is added to your account in April/May 2018, it's then paid monthly (assuming you've contributed that month).
    Once in your account it counts as money, so you'll get interest on it too.
    So how about paying as much as you can into the LISA this tax year to maximise this years bonus, then continue next year, up to the £8000.
    As the deadline for H2B is rapidly approaching, maybe just use interest giving current accounts (say 3%) and/or a high interest limited withdrawal account for any remaining cash.
  • Alexland
    Alexland Posts: 9,652
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    Firstly check you are in a position to make a qualifying purchase with a LISA in future. In particular you need to be a FTBer, under 40 at the point of opening, more than 12 months away from the money being used, needing a mortgage and the property must be below £450k.

    Then assuming you are buying in the next few years you are probably best sticking to Cash with the Skipton LISA.

    You want to ensure you get £4k into the LISA each tax year for the maximum 25% bonus.

    The tax year ends on 5th April and it would be a shame if you cannot fill the LISA in the next 5-6 weeks as it sounds like you will have excess income next tax year.

    Could your parents lend you the money for now and then you could pay them back as a priority at the start of the next tax year before filling your LISA again?

    Alex
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