Lifetime ISAs guide

Alexland

The LISA holder needs to be taking a mortgage.

https://www.gov.uk/lifetime-isa

Buying your first home

You can use your savings to help you buy your first home if all the following apply:

- the property costs £450,000 or less
- you buy the property at least 12 months after you open the Lifetime ISA
- you use a conveyancer or solicitor to act for you in the purchase - the ISA provider will pay the funds directly to them
- you're buying with a mortgage

As per the HTB guidance most (if not all) lenders would want to see all parties on the mortgage as it gives them authority to reposess and sell the property if the worst happens which is important to secure the loan.

Alex

cooldude255220

Alexland wrote: »

The LISA holder needs to be taking a mortgage.
Alex

You appear to have much more knowledge than I do abut ISAs, so I'm happy to bow to your expertise, but with respect that's not how I interpret it!

The eligibility given for H2B ISAs and LISAs appear to be very similar (purchased with a mortgage and buying with a mortgage respectively).

I take that to mean (as is the case with H2B LISAs) that as long as the property is subject to a mortgage, it need not be in both LISA owner's names (i.e. the test is whether the property is being bought with a mortgage, not whether the LISA holder themselves is taking a mortgage).

Thanks for your assistance!

Edited to add:

Looking at schedule 1(6)(6)(a)(i) of the Individual Savings Account Regulations 1998, I'm even more certain.

The purchase must be ... funded by a loan that will be secured by a charge over the land by way of ...a legal mortgage

To me that doesn't required the LISA owner to be named on the mortgage.

lukejackson

Could I use both a LISA and money from another savings account to pay for a mortgage deposit? I have recently come into some money but it would take a while to filter it all into the LISA. TIA.

Zorillo

Yes you can but the LISA needs to be open for 12 months to use the bonus.

Alexland

cooldude255220 wrote: »

I take that to mean (as is the case with H2B LISAs) that as long as the property is subject to a mortgage, it need not be in both LISA owner's names (i.e. the test is whether the property is being bought with a mortgage, not whether the LISA holder themselves is taking a mortgage).

Looking at schedule 1(6)(6)(a)(i) of the Individual Savings Account Regulations 1998, I'm even more certain.

To me that doesn't required the LISA owner to be named on the mortgage.

I see the angle you are taking but in practice I am unsure you will find a lender that would accept a LISA holder buying into a property, with the aid of a mortgage, without being 'on' (ie. agreeing to be bound by the terms of the) the mortgage. How could the lender enforce the terms of the loan to repossess and sell the property if someone with a legal interest in the property has not agreed to be bound by the mortgage terms?

Alex.

cooldude255220

Alexland wrote: »

I see the angle you are taking but in practice I am unsure you will find a lender that would accept a LISA holder buying into a property, with the aid of a mortgage, without being 'on' (ie. agreeing to be bound by the terms of the) the mortgage. How could the lender enforce the terms of the loan to repossess and sell the property if someone with a legal interest in the property has not agreed to be bound by the mortgage terms?

Alex.

Yeah, I can appreciate where you're coming from - practically I don't think it's an option, but curiosity got the better of me so I wanted to see if it was theoretically possible.

TheBanker

I know it's early days, and no bonuses have been paid yet, but has anyone successfully withdrawn from their LISA towards a house purchase yet?

I've just made an offer on a house and the seller wants to complete in July. I'm using my LISA balance at completion, not at exchange, so this should work in terms of timescales to make a withdrawal after receiving the bonus in early May (Hargreaves Lansdown suggest it can take a month to process the withdrawal).

I've spoken to two solicitors, neither of whom seemed very sure about the process. The first one insisted I couldn't use the LISA as my house will cost >£250k (even though I stressed it was a LISA, not a HTB ISA). The second one said they thought it would be ok but they'd look into it. I'm waiting to hear back.

Anyone else in a similar boat?

pink_pirlie

TheBanker wrote: »

I know it's early days, and no bonuses have been paid yet, but has anyone successfully withdrawn from their LISA towards a house purchase yet?

Anyone else in a similar boat?

We should be getting ours this week / early next week. Our 1 year anniversary is Friday and hoping funds will be released shortly afterwards. Obviously without the bonus - we will have to take a 25% hit on that or leave it until retirement. We weren’t expecting to be able to use the product at all as we were due to complete February but delays have meant we can now so that’s a huge bonus in itself.

Advice - Contact HL ASAP to get the ball rolling.

They send you a form.
You return it
They send forms to your solicitor
Your solicitor returns them
HL release the funds - which they say can take up to 30 days (but hopefully quicker)

All the forms have to go via the post so best to request them in sufficient time.

Is your money in cash or invested?

Cash- should be much quicker than 30 days.
Investments - they have to sell before they can release the funds.

Just send them a message through your account and they attached the initial form to their reply.

You also have to give your solicitor a declaration. We used the government sample one as they don’t have their own yet. Our conveyancer said this was fine -

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/695292/example_of_Investor_model_dec.pdf

There is a guide for conveyancers too which you could point yours to -
https://www.gov.uk/guidance/conveyancers-first-time-residential-purchase-with-a-lifetime-isa


HL have been super helpful for us!!
They will be getting a mention on praise vent board next week if it all works out okay and we get out money in the next week.

Plus

Do we know the dates for bonus payments? For example, someone who paid in on 6th April 2017 and 6th April 2018. I think the date for the 2017/18 bonus is 'early May', so does that mean 6 April money has its bonus paid in 'early June'? Given the 30 day timeline HL describes above, does that mean you in practice can't complete with both bonuses until early July?

pink_pirlie

Plus wrote: »

Do we know the dates for bonus payments? For example, someone who paid in on 6th April 2017 and 6th April 2018. I think the date for the 2017/18 bonus is 'early May', so does that mean 6 April money has its bonus paid in 'early June'? Given the 30 day timeline HL describes above, does that mean you in practice can't complete with both bonuses until early July?

If you want to use the bonus you MAY have to wait for it to be paid into your account before you can return the form to them as you have to specify the amount you want to withdraw on the form. It would definitely be worth sending them a DM in your online account to ask them if you could complete the form in anticipation of the bonus being paid and the balance on the account being higher.

I believe they had to submit requests for the bonus before 19th April (according to an email I got from HMRC). What I don’t know if this was with balances on account at close of play 5 April or a later date and therefore include any early payments paid in for 18/19.

Re timescales - Our money was held in cash not funds so it has been a very quick process - we sent the form to HL last Friday and they are releasing the money tomorrow. In between forms have gone back and forth between them and our solicitor. Everyone has kindly sent everything express post.
They have been absolutely excellent, keeping us informed throughout the process.

We are withdrawing just our deposits for the purchase and will have to take a 25% hit on the bonus as we couldn’t delay completion for another two weeks until it is paid.

Good luck with your purchase!!