Lifetime ISAs guide

[Deleted User]

Alexland wrote: »

No, because you would already own an interest in (the) property.

Thanks Alex - I feared that may be the answer but couldn't find it definitively.

Bit of a pain, given that it's still the "first" property!! But understandable.... as all kinds of awkward scenarios then may play out - e.g. buying 50% of a £400k home that then rockets to £500k and you can't buy the other 50% out of a LISA etc.

Ah well.... wait a bit longer to max the bonus up from the current few k in April, or do without.... decisions decisions!

Alexland

Somerset_La_La_La wrote: »

Ah well.... wait a bit longer to max the bonus up from the current few k in April, or do without.... decisions decisions!

If you are 'just about there' in terms of your deposit savings the most important thing is to find the right property rather than trying to get the timing right to maximize the bonus and potentially end up with the wrong property.

Alex.

Lee12347

Hi, is anyone having trouble receiving their bonus from Skipton if they transferred from Nutmeg last year?

eskbanker

Lee12347 wrote: »

Hi, is anyone having trouble receiving their bonus from Skipton if they transferred from Nutmeg last year?

There were a few Skipton glitches reported by previous posters, but if you transferred a Nutmeg LISA into a Skipton one during 2017/18 then you should have received the bonus in late April, so if that didn't happen then you'll obviously need to chase it up with them. Was the transfer confirmed and the proceeds visible in your Skipton account?

[Deleted User]

My nutmeg was fine, I got all the bonus & interest I expected with no issues!

Go to account -> Pay In and you should see something similar to this:

ISA Transfer Summary
Please note: Where £0.00 displays below, we will be asking your existing provider for the applicable amounts.

Previous Provider Amount Funds Received Status Status Updated
Nutmeg £100. xx July 2017 Processed xx July 2017

russjj

Dear All,

Something to be aware of (I've already sent to the editors):
We have found that due to the 18/19 monthly bonus system, if you want the full government bonus make sure you add your investment 60 days before you complete on your house, otherwise you will pay 25% withdrawal fee on the bonus!

We are buying a house which was anticipated to complete sometime in June. We had already moved our Help to Buy ISAs into our Lifetime ISAs (Skipton), however we did not want to add our £4,000ea 18/19 allowance until we were sure the house would not complete until after we had held the accounts 12 months as we would end up losing out as even with the bonus due to the 25% withdrawl fee we would both be down £250 (£4,000 * 125% * 75% = £3,750).

We recently became confident the house would now complete early July (so we would have held the Lifetime ISAs 12 months) and so duly invested our £4,000ea. Then it got complicated. On speaking to Skipton, they confirmed (as does the government website) that even if we withdraw that money soon to complete on our house, we will still receive the 25% government bonus. However if this bonus arrives after we have completed, it will be paid back into a Lifetime ISA, and should we wish to use it for cash (we're buying a house, we need the cash!) we will then pay a 25% withdrawl charge on this! Between us that is £500 less than we had budgeted for, all due to the monthly bonus timescales which have only recently been made clear!

Obviously we are disappointed by this as this does not seem in the spirit of the government scheme, and we have an extreme case as we added the full £4,000 in one hit, however if you were to save £333 monthly (which is probably what's anticipated) this means that you will always lose £20-£40 of government bonus due to the way this is laid out - not extreme but not really fair!

Regards, Russ

Alexland

russjj wrote: »

However if this bonus arrives after we have completed, it will be paid back into a Lifetime ISA, and should we wish to use it for cash (we're buying a house, we need the cash!) we will then pay a 25% withdrawl charge on this! Between us that is £500 less than we had budgeted

Yes but if (after you have completed on the house purchase) you ISA transfer the Cash LISA bonus to a S&S LISA provider such as AJ Bell YouInvest and make a mainstream investment in a well diversified and low cost fund such as the Vanguard LifeStrategy or HSBC Global Strategy series the money will grow and compound over the next 20+ years and you can withdraw without penalty at age 60.

Even after you become a homeowner the LISA continues as a useful part of your retirement toolkit.

Alex.

eskbanker

russjj wrote: »

We have found that due to the 18/19 monthly bonus system, if you want the full government bonus make sure you add your investment 60 days before you complete on your house, otherwise you will pay 25% withdrawal fee on the bonus!

[...]

all due to the monthly bonus timescales which have only recently been made clear!

As below, this came up in another thread yesterday - it has always been in the Lifetime ISA scheme rules that bonus claim periods will run from the 6th of one month to the 5th of the following month, and will take up to 28 days thereafter to be paid. It has been covered many times in this thread - Skipton may only relatively recently have added explicit reference to it on their website, but it's simply to clarify what was always going to be the case.

When planning timings, it's also important to understand that Skipton need up to 30 days from receipt of all completed declarations to releasing the funds.

eskbanker wrote: »

I take your point that Skipton's relatively recent website graphic illustrating bonus scheduling for 2018/19 has made things clearer, but this bonus scheduling isn't Skipton-specific, it applies to all LISA providers and has been in the scheme rules since launch last year (bonus claim periods are explained at clause 9B.24 in this document from early 2017 that's been regularly referred to on here).

russjj

Alexland - thank you for your reply, fully agree a Lifetime ISA does not lose value however the cash is infinitely more valuable now rather than 30 years later (even with growth)!

Eskbanker - thank you for your clarification, unfortunately we did not read the government white paper in detail, I feel like honestly that is asking a lot of people, I posted the information as a simplified warning only in the hopes that somebody see it and avoids making the same mistake!

Additionally, for a Cash LISA, I don't understand why the bonus is paid monthly rather than at the time of use - this makes life more difficult for house buyers and adds nothing for savers, only benefit is for S&S LISAs

eskbanker

russjj wrote: »

Eskbanker - thank you for your clarification, unfortunately we did not read the government white paper in detail, I feel like honestly that is asking a lot of people, I posted the information as a simplified warning only in the hopes that somebody see it and avoids making the same mistake!

Yes, not everybody will have read through the full rules, which are pretty lengthy, but my point was mainly that the rules have always been the same since day one, even though some are only just realising what they actually mean - they've been summarised on here since the launch of the scheme, such as in post #723 of this thread from just over a year ago, shortly after the Skipton product was released. That post also quoted Skipton's site as it was at the time, stating that bonuses would be paid "within 4-9 weeks" [of contributing, from 2018/19 onwards], so Skipton weren't concealing anything either.

russjj wrote: »

Additionally, for a Cash LISA, I don't understand why the bonus is paid monthly rather than at the time of use - this makes life more difficult for house buyers and adds nothing for savers, only benefit is for S&S LISAs

I don't get the distinction you're making about relative benefits of monthly bonuses for cash v S&S LISAs? In both cases, interest (cash) or growth (S&S) will be larger by being based on the bonus-enhanced balance from as soon as the bonuses have been added.

The bonus addition is monthly because the product isn't just aimed at first-time buyers but also long-term retirement planners, who would no doubt be unhappy if bonuses were only payable at age 60, thereby preventing compounding of interest/growth.