Lifetime ISAs guide

Ninetails

Alexland wrote: »

Epm-84 had an interesting idea of what to do in the event the LISA cannot be used for a property purchase - withdraw most if it and pay the penalty (so loss of bonus and a bit more) but keep enough in the LISA for retirement that the bonus on the amount left is equal to the bit more penalty paid on the amount withdrawn.

That way you would have freed up cash for the deposit for a property over £450k and with the remainder in the LISA (which would need to be kept until 60) you still have the amount you started with.

Alex

Many thanks Alex. Have started to read this thread from the start but need a bex and a lie down in a dark room.

Haven't found Epm-84's post but generally the idea is to open a LISA anyway and transfer the £4K into it.

Pay into both HTB and LISA and see what happens.....

By the time they are ready to buy, hopefully the max purchase price will be more realistic.

Wings_of_Ambition

Requesting a quick check of my understanding of the rules....

My situation
- I have around £5700 in a HTB ISA.
- I'm likely to buy my first house in the next year, but am looking at properties around the £350k-£400k mark.

The rules
- To continue paying into the HTB ISA is relatively pointless, due to the £250k limit.
- Transferring all the HTB funds into a LISA risky due to the 25% penalty (my calcs have a loss of almost £500 on a total year 1 balance of £7700 [£5700 plus the remaining £2k of this years £4k allowance])

Possible solution
Was thinking of opening a LISA with £1 to start the clock. Stop paying into the HTB ISA, but leave the money where it is. If I buy a property in the next year, no loss (ok.... 6p loss!). If it gets to roughly this time next year, and I haven't bought a property, then max out the LISA to £4k in March 2019, and add a further £4k at the start of the 19/20 tax year. As the 18/19 bonus is paid monthly (instead of as a lump sum as it will be this year), I won't get a single £1k bonus.... instead it'll be approximately £167/month after I've maxed it out to £8k. (£167 calculated from 25% of 8k, divided over 12 months... I'm assuming that's how it'll be calculated, haven't seen any solid info yet)

What glaring errors am I making here!? Is there a better way to do it?

Thanks all


Cheeky extra question
After a LISA is open, could I also continue paying into my HTB ISA (on the understanding I won't be claiming the HTB bonus)... I ask as the 4% interest rate on my HTB ISA is better than my current account?

Alexland

Yes you can continue to pay into the HTB ISA while also paying into the LISA. But you must close the HTB ISA when you use your LISA to purchase a property as you will be no longer a FTBer so no longer eligible for the account.

Yes as your savings will only be around £8k then opening a LISA now with £1 to start the clock then making a further £3999 contribution towards the end of next tax year and a further £4k at the start of the further tax year will be fine. If you contribute £4k your monthly bonus will be £1k - the bonus will only be spread out if your contributions are spread out.

Ninetails

As a newbie to this thread, thank you to everyone for their comments and guidance - Alexland in particular...you're so patient!

So are there thoughts on which LISA is generally better for young ones years off from homebuying? Nutmeg, HL, AJ Bell or Skipton?

Alexland

Ninetails wrote: »

As a newbie to this thread, thank you to everyone for their comments and guidance - Alexland in particular...you're so patient!

So are there thoughts on which LISA is generally better for young ones years off from homebuying? Nutmeg, HL, AJ Bell or Skipton?

No problem - eskbanker also does a very good job as my colleague on this forum.

If you are 5+ years away from buying then it's worth considering S&S if you are ok with the risk your money might go up and down during the period. Nutmeg is good for beginners, HL is good for regular contributions (no trade fees) and AJ Bell is good for lump sums.(£1.50 trade fees but lower platform fee) however you need a plan to start derisking as you get in the last 5 years before withdrawal.

If you go with Nutmeg then take regular printouts in case you need to make a FSCS claim.

Alex

Ninetails

Alexland wrote: »

No problem - eskbanker also does a very good job as my colleague on this forum.

If you are 5+ years away from buying then it's worth considering S&S if you are ok with the risk your money might go up and down during the period. Nutmeg is good for beginners, HL is good for regular contributions (no trade fees) and AJ Bell is good for lump sums.(£1.50 trade fees but lower platform fee) however you need a plan to start derisking as you get in the last 5 years before withdrawal.

If you go with Nutmeg then take regular printouts in case you need to make a FSCS claim.

Alex

Thank you. Yes, of course thanks to eskbanker.

But Nutmeg don't allow HTB transfer


"Can I transfer my Help to Buy ISA in? No"

Alexland

Ninetails wrote: »

But Nutmeg don't allow HTB transfer

Agreed sorry I thought you were asking a general question rather than one for a HTB transfer scenario.

Ninetails

Alexland wrote: »

Agreed sorry I thought you were asking a general question rather than one for a HTB transfer scenario.

No problem, thought I had misread. Thanks

epm-84

owenjt wrote: »

Not sure if this has already been answered - does the interest from your Help to Buy ISA count towards your £4000 LISA allowance? I thought it did, but having transferred my HTB to my LISA it's not showing as part of my allowance. Transferred from Halifax to Skipton.

I've noticed a different scenario. I've paid in £2000 to my Help2Buy ISA this tax year and £1 in to the Lifetime ISA and in Skipton online (now the transfer has completed) it says I have £17905 of my ISA allowance left (unless I've used some of that with another provider.) The £94 difference is not the total interest paid in to my Help2Buy ISA this financial year but it seems to be the total interest incurred on my Help2Buy ISA this financial year (my Help2Buy ISA paid interest annually on 1st December, so the interest for the period 1st December 2016 -5th April 2017 looks to have been deducted.)

However, while I understand this year's interest counts towards the £4,000 maximum you can pay in to a Lifetime ISA, I'm surprised they're claiming the £94 interest now counts towards my overall ISA allowance of £20,000.

Ed-1

epm-84 wrote: »

I've noticed a different scenario. I've paid in £2000 to my Help2Buy ISA this tax year and £1 in to the Lifetime ISA and in Skipton online (now the transfer has completed) it says I have £17905 of my ISA allowance left (unless I've used some of that with another provider.) The £94 difference is not the total interest paid in to my Help2Buy ISA this financial year but it seems to be the total interest incurred on my Help2Buy ISA this financial year (my Help2Buy ISA paid interest annually on 1st December, so the interest for the period 1st December 2016 -5th April 2017 looks to have been deducted.)

However, while I understand this year's interest counts towards the £4,000 maximum you can pay in to a Lifetime ISA, I'm surprised they're claiming the £94 interest now counts towards my overall ISA allowance of £20,000.

Who did you transfer the H2B ISA from?