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    • Kendog1
    • By Kendog1 8th Nov 17, 1:10 PM
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    Kendog1
    LISA/HTB - what to do after April '18
    • #1
    • 8th Nov 17, 1:10 PM
    LISA/HTB - what to do after April '18 8th Nov 17 at 1:10 PM
    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!
Page 1
    • eskbanker
    • By eskbanker 8th Nov 17, 1:28 PM
    • 5,792 Posts
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    eskbanker
    • #2
    • 8th Nov 17, 1:28 PM
    • #2
    • 8th Nov 17, 1:28 PM
    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....
    • someone
    • By someone 11th Nov 17, 10:23 AM
    • 635 Posts
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    someone
    • #3
    • 11th Nov 17, 10:23 AM
    • #3
    • 11th Nov 17, 10:23 AM
    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.
    • Alexland
    • By Alexland 11th Nov 17, 1:52 PM
    • 656 Posts
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    Alexland
    • #4
    • 11th Nov 17, 1:52 PM
    • #4
    • 11th Nov 17, 1:52 PM
    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.
    • 166million
    • By 166million 11th Nov 17, 2:23 PM
    • 1,067 Posts
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    166million
    • #5
    • 11th Nov 17, 2:23 PM
    • #5
    • 11th Nov 17, 2:23 PM
    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
    Last edited by 166million; 11-11-2017 at 2:30 PM.
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    • Alexland
    • By Alexland 11th Nov 17, 6:09 PM
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    Alexland
    • #6
    • 11th Nov 17, 6:09 PM
    • #6
    • 11th Nov 17, 6:09 PM
    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.
    Last edited by Alexland; 11-11-2017 at 7:01 PM.
    • JustAnotherSaver
    • By JustAnotherSaver 15th Nov 17, 9:09 PM
    • 2,555 Posts
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    JustAnotherSaver
    • #7
    • 15th Nov 17, 9:09 PM
    • #7
    • 15th Nov 17, 9:09 PM
    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?

    • Ed-1
    • By Ed-1 15th Nov 17, 10:14 PM
    • 2,032 Posts
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    Ed-1
    • #8
    • 15th Nov 17, 10:14 PM
    • #8
    • 15th Nov 17, 10:14 PM
    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?
    Originally posted by JustAnotherSaver
    They wouldn't be better off if they can put more into a LISA as they'd get a bigger bonus.
    • JustAnotherSaver
    • By JustAnotherSaver 15th Nov 17, 10:31 PM
    • 2,555 Posts
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    JustAnotherSaver
    • #9
    • 15th Nov 17, 10:31 PM
    • #9
    • 15th Nov 17, 10:31 PM
    They wouldn't be better off if they can put more into a LISA as they'd get a bigger bonus.
    Originally posted by Ed-1
    Are you just generally speaking? Did you skim read my post?

    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.

    • eskbanker
    • By eskbanker 16th Nov 17, 12:02 AM
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    eskbanker
    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?
    • JustAnotherSaver
    • By JustAnotherSaver 16th Nov 17, 8:09 PM
    • 2,555 Posts
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    JustAnotherSaver
    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....
    Originally posted by eskbanker
    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.

    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.
    This is the one that will probably make the difference. I'd forgotten about that point.

    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?

    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?
    Not likely.
    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.

    • bowlhead99
    • By bowlhead99 16th Nov 17, 8:34 PM
    • 6,873 Posts
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    bowlhead99

    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?
    Originally posted by JustAnotherSaver
    When it comes the time of purchase, each buyer can only use either a HTB ISA or a LISA to buy their property with the help of a bonus. I think you get that bit.

    But:

    If you don't transfer your HTB ISA into a LISA product by the end of this tax year preserving the bonus-able status of the money in it, you lose the opportunity to do so. You could still physically move it into the LISA later but it would count against that year's LISA contribution limit, and might take multiple tax years to bring it all over manually staying within the "max £4k a year into the LISA" rules.

    For this tax year ONLY as a transition year you are allowed to contribute to the LISA £4k of new 2017/18 money plus whatever had built up in the HTB prior to 6th Apr '17.

    Whereas, in future years you can only do £4k total new money into the LISA and *anything* put into the LISA counts against the limit including transfers from HTB ISAs.

    If you can only do £200 a month and you like the high rate of the HTB, one thing to consider is to use a decent "regular saver" account - e.g. Nationwide Flexclusive Reg Saver pays 5% on up to £250pm and is instant access so when you get to the end of a tax year you can drop the accumulated balance into the LISA and go back to saving outside the ISA from month to month in the RS accounts.

    You are right of course that if you will definitely never be able to exceed the HTB limit and will not be buying an expensive property at the end, you don't need to embrace the LISA but you never know what good fortunes or presents or pay rises or bonuses or unexpected inheritances might bring.
    Last edited by bowlhead99; 16-11-2017 at 8:43 PM.
    • JustAnotherSaver
    • By JustAnotherSaver 16th Nov 17, 9:13 PM
    • 2,555 Posts
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    JustAnotherSaver

    For this tax year ONLY as a transition year you are allowed to contribute to the LISA £4k of new 2017/18 money plus whatever had built up in the HTB prior to 6th Apr '17.

    Whereas, in future years you can only do £4k total new money into the LISA and *anything* put into the LISA counts against the limit including transfers from HTB ISAs.
    Originally posted by bowlhead99
    If you can only do £200 a month and you like the high rate of the HTB, one thing to consider is to use a decent "regular saver" account - e.g. Nationwide Flexclusive Reg Saver pays 5% on up to £250pm and is instant access so when you get to the end of a tax year you can drop the accumulated balance into the LISA and go back to saving outside the ISA from month to month in the RS accounts.
    Wasn't aware of the opening quote. I thought you could transfer in later years too. And the regular saver thing is a very good point.

    +1 for the LISA then.

    Hopefully you don't leave this board. You're too helpful


    Question is, when would you open a cash LISA/transfer to it?

    February sound fair? Not too early/late?


    EDIT x2: What about the point of accessing the money, is it different for the HTB ISA and the LISA?
    I'd imagine that it'd be needed to form part of the deposit, so would need accessing at that stage of the house buying process & not at the very end after you've got your keys & you've moved in.
    Last edited by JustAnotherSaver; 16-11-2017 at 9:16 PM.

    • Plus
    • By Plus 17th Nov 17, 11:28 AM
    • 239 Posts
    • 179 Thanks
    Plus
    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.
    Originally posted by someone
    My guess would be the Government's exit strategy for LISAs if the market becomes unsustainable is to allow them to become regular ISAs, including the bonus and with no withdrawal penalty.

    That is basically zero-cost for a future government (because they gave up the tax revenue in the years people contributed, so there's no further tax revenue for future-HMG to lose when subscribers withdraw unless they hit the penalties), is relatively painless in terms of admin (plenty of existing ISA providers and the rules are well understood), and gets the government some good PR ('free cash for savers') instead of having to admit their policy failed. From savers' perspective it's a win because you lose nothing, you are just no longer forced to spend it on a house or waiting until 60 though you can still do that if you want.

    All other things being equal, it might in some cases be rational to gamble on LISAs 'failing' because it then looks roughly like a SIPP where you don't have to wait until retirement to withdraw. Only your own assessment can tell you whether it's worth risking the 6% withdrawal penalty if they don't 'fail' in this way.
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