Help to Buy ISA guide

Conor_Mason

Hi

I have a couple of questions about both the Help to buy ISA and the LISA. I currently have a help to buy ISA set up and paying £200 into it each month. I am not near moving out of my parents house for the next few years anyway so i am wondering if it is worth while in opening a LISA instead of the help to buy and if so am i best to transfer the money i have saved in the help to buy into the LISA?

The second question i have is if i did have a LISA can I make contributions to it and a Cash ISA in the same tax year? I know this if forbidden with the help to buy with most providers.

Finally the last question i have is, with either the help to buy or the LISA can the bonus be used if i was to build my own home and not actually buy an existing property?

Any light that can be shed on these areas would be greatly appreciated.

Thanks

Conor

Ed-1

Conor_Mason wrote: »

Hi

I have a couple of questions about both the Help to buy ISA and the LISA. I currently have a help to buy ISA set up and paying £200 into it each month. I am not near moving out of my parents house for the next few years anyway so i am wondering if it is worth while in opening a LISA instead of the help to buy and if so am i best to transfer the money i have saved in the help to buy into the LISA?

The second question i have is if i did have a LISA can I make contributions to it and a Cash ISA in the same tax year? I know this if forbidden with the help to buy with most providers.

Finally the last question i have is, with either the help to buy or the LISA can the bonus be used if i was to build my own home and not actually buy an existing property?

Any light that can be shed on these areas would be greatly appreciated.

Thanks

Conor

A LISA is definitely better than a H2B ISA if you're buying a house as the bonus and maximum house price limits are both more generous.

The reason you can't contribute to another cash ISA while paying into a H2B ISA is that a H2B ISA is a cash ISA. A lifetime ISA is a separate ISA type. It's not a cash ISA (even though it can hold cash).

Can I use a Help to Buy: ISA bonus to buy land to build my first property on?
Assuming that you meet all the other eligibility criteria, you will be able to use the government bonus towards the purchase of the land for a self-build property which is the only home you will own, be where you intend to live and be purchased with a mortgage. The land must be in the UK, have a price of £250,000 or less (with a higher price limit of £450,000 in London).

Can I use the Help to Buy: ISA bonus to fund the construction of a home on land I own?
No. You cannot use a government bonus to fund the construction of a home on land you already own.

I own undeveloped or agricultural land, am I considered a first time buyer?
Yes. If you own land which is undeveloped, and is not in the process of being developed into a residential property, you may still be a first time buyer and able to use a government bonus to purchase a home.

https://www.helptobuy.gov.uk/help-to-buy-isa/faq/

The property rules are identical to the LISA (other than the cap outside London).

kezzygirl

Hi, not sure if this has been asked before, but here is my situation:

£2750 in a nationwide htb isa @ 3%
I have opened a skipton lisa
I have a flexdirect account with nationwide, £600 saved currently @ 5%

My plan is to transfer £4000 into my LISA in April 2018 in order to obtain the government bonus.

My question is, as I will not be using the htb isa to buy our first home, would it make sense for me to transfer an amount from my htb to my flexdirect acct to benefit from the 5% until april?

Hubby has a htb isa also, but is not entitled to a LISA due to his age, financially would it make more sense to use our htb isa's to buy a home, or deposit it all into my LISA and use the lisa only when we come to buy?

My thinking is, that if I cannot use the lisa and hubby use the htb isa to buy a home, I would like to maximise the amount in my lisa.

any help appreciated....I cannot get my head around it!!

eskbanker

kezzygirl wrote: »

My plan is to transfer £4000 into my LISA in April 2018 in order to obtain the government bonus.

My question is, as I will not be using the htb isa to buy our first home, would it make sense for me to transfer an amount from my htb to my flexdirect acct to benefit from the 5% until april?

The main thing is to get the 25% bonus on as much as possible, so make sure you get all of your HTB money into the LISA by 5 April 2017 - all HTB contributions, plus interest, from the 2016/17 tax year (or before) are excluded from the £4K annual LISA allowance so you should end up with more than £4K in there by the end of the tax year.

However, this means that you need to transfer your 2016/17 HTB money directly from there to the LISA to qualify for the 25% bonus - if you're getting 3% on this then leave the transfer until the end of the tax year to benefit from the best interest (although there is a risk that Skipton may stop accepting HTB to LISA transfers).

For any 2017/18 money, yes, it makes sense to put this into a 5% account until the end of the tax year before paying into the LISA.

I don't know the answer to the question about using a HTB and a LISA between a couple so the above all relates to maximising your return without addressing hubby's....

kezzygirl

eskbanker wrote: »

The main thing is to get the 25% bonus on as much as possible, so make sure you get all of your HTB money into the LISA by 5 April 2017 - all HTB contributions, plus interest, from the 2016/17 tax year (or before) are excluded from the £4K annual LISA allowance so you should end up with more than £4K in there by the end of the tax year.

However, this means that you need to transfer your 2016/17 HTB money directly from there to the LISA to qualify for the 25% bonus - if you're getting 3% on this then leave the transfer until the end of the tax year to benefit from the best interest (although there is a risk that Skipton may stop accepting HTB to LISA transfers).

For any 2017/18 money, yes, it makes sense to put this into a 5% account until the end of the tax year before paying into the LISA.

I was thinking of withdrawing £1800 from the htb isa to put in the flexdirect at 5%, leaving about £1000 in htb isa. My plan is to transfer my htb and the funds from flexdirect in april 2018 to the lisa. does that make financial sense?!

veryintrigued

Not sure if its been mentioned (it's not in MSEs best buys):

https://www.thenottingham.com/savings/products/help-to-buy-isa/

Rich2808

veryintrigued wrote: »

Not sure if its been mentioned (it's not in MSEs best buys):

https://www.thenottingham.com/savings/products/help-to-buy-isa/

Yes - its a good rate.

But its branch only - so unless you live in their branch area (mostly east Midlands with a few others in Hertfordshire and east Anglia) or can get to one of them then you can't open one.

veryintrigued

Rich2808 wrote: »

Yes - its a good rate.

But its branch only - so unless you live in their branch area (mostly east Midlands with a few others in Hertfordshire and east Anglia) or can get to one of them then you can't open one.

Branches all the way up to the Humber and more coming:

https://www.thenottingham.com/news/nottingham-building-society-opens-seven-new-branches/

eskbanker

kezzygirl wrote: »

I was thinking of withdrawing £1800 from the htb isa to put in the flexdirect at 5%, leaving about £1000 in htb isa. My plan is to transfer my htb and the funds from flexdirect in april 2018 to the lisa. does that make financial sense?!

Yes, I was previously under the impression that you had more than the £4K annual LISA allowance available but if that isn't the case then it would make sense to put as much as possible into 5% accounts (use Flexclusive regular saver too) before shifting into LISA later.

eucaliptus

Hi All,

I'm in the process of buying a flat and I'm rather confused on how the HTB ISA process works.

Firstly, I am aware that the bonus cannot be used towards the deposit and as a result of this I have a 10% deposit ready for exchange and I requested 90% of the property value to my lender.

So, as I said, I'm planing to pay a deposit of 10% on exchange. I've been reading that between exchange and completion my solicitor will claim the bonus (in my case around £1,700) and then my lender on completion will put the remaining 90%.

Basically the problem is that on completion there will be too much money:

- The 10% desposit
- The 90% coming from the lender
- The £1,700 bonus that must be used towards completion.

So my question is, what's going to happen with the outstanding money? Am I going to get back £1,700 from the 10% deposit so that the bonus can be used? Why this is not explained anywhere?

Thanks in advance,
Xavi