Lifetime ISAs guide

aj23_2

eskbanker wrote: »

It's not strictly a like-for-like comparison when there's just over two months from now until the new tax year plus there's a delay in LISA bonuses being applied, but over the period you're effectively weighing up earning 1% on £5K in the LISA versus 2% on £4K with Ford, so the latter is £30 better from an interest perspective.

Well it wouldn't be 1% on £5k, it would be 1% on just over £20k in February 2020 when interest is paid. I know I'll get the £1k bonus regardless, but was wondering if I can squeeze any extra interest from another account first in the next tax year before the contribution to the LISA has to be made. For me, it looks like Ford Money would be the best option (12 months, no DD requirements, no min. pay-ins etc.)

eskbanker

aj23 wrote: »

Well it wouldn't be 1% on £5k, it would be 1% on just over £20k in February 2020 when interest is paid.

But the existing balance in the LISA is irrelevant in the context of this particular evaluation - it's a given that you'll get 1% on the £15K that's already in there, so for the specific purposes of what to do with your 2019/20 contribution you only need to be comparing putting that £4K straight into the LISA versus keeping it elsewhere first.

aj23_2

eskbanker wrote: »

But the existing balance in the LISA is irrelevant in the context of this particular evaluation - it's a given that you'll get 1% on the £15K that's already in there, so for the specific purposes of what to do with your 2019/20 contribution you only need to be comparing putting that £4K straight into the LISA versus keeping it elsewhere first.

I'll look into the 1 year fixed accounts. Might as well try and make it work before the contribution has to be deposit in my favour.

Kyaw

Hello all,

I’m not sure if the similar question was asked before.
If one uses LISA for the first home and circumstances change, can he/she rent it like the H2B ISA?

Your answers will be appreciated.
Many thanks

eskbanker

Kyaw wrote: »

If one uses LISA for the first home and circumstances change, can he/she rent it like the H2B ISA?

The MSE blog written about the HTB ISA had references to 'Lifetime ISA' appended to it later, suggesting that the government attitude would be the same for both: https://blog.moneysavingexpert.com/2016/04/can-you-rent-out-a-home-bought-with-a-help-to-buy-isalifetime-isa/

Alexland

Kyaw wrote: »

If one uses LISA for the first home and circumstances change, can he/she rent it like the H2B ISA?

Provided you made the purchase with the intention for it to be your home you can do what you want with it afterwards. It might look a bit suspicious if you immediately put it up for rent - the couple who bought my last property listed it for-rent before they had even completed the purchase using my for-sale photos! If it was ever investigated you might be asked to demonstrate how your circumstances changed after the completion date.

Alex

eskbanker

Alexland wrote: »

Provided you made the purchase with the intention for it to be your home you can do what you want with it afterwards. It might look a bit suspicious if you immediately put it up for rent - the couple who bought my last property listed it for-rent before they had even completed the purchase using my for-sale photos! If it was ever investigated you might be asked to demonstrate how your circumstances changed after the completion date.

Perhaps worth noting that the requirements of the scheme are more stringent than simply intending for it to be the purchaser's home, as per the investor's declaration:

You must:

• purchase a legal interest in land with a loan taken as a charge over the property i.e. a mortgage but not a ‘buy to let’ mortgage;
• on completion of the purchase immediately occupy the land as your only or main residence;
• on completion of a partially completed dwelling occupy it as your only or main residence.

so not occupying the property immediately would be in breach of this.

AlexDee

Quick query....
I’m 28 and already own a home so a LISA would need to be for retirement. I already invest into a stocks and shared ISA with vanguard and have also made payments into a cash ISA this year (emergency fund account).

Would I also be able to open and pay into a LISA? I’m considering it as the 25% bonus for the next few years does seem rather too good to miss out on...albeit I do enjoy the flexibility of being able to use my S&S ISA funds penalty free when I like.

Thanks

EDIT: FYI I am lucky enough to be in a defined benefit pension so extra retirement savings are a luxury rather than a necessity.

eskbanker

AlexDee wrote: »

I’m 28 and already own a home so a LISA would need to be for retirement. I already invest into a stocks and shared ISA with vanguard and have also made payments into a cash ISA this year (emergency fund account).

Would I also be able to open and pay into a LISA? I’m considering it as the 25% bonus for the next few years does seem rather too good to miss out on...albeit I do enjoy the flexibility of being able to use my S&S ISA funds penalty free when I like.

Yes, you can open and pay into a LISA, as long as you don't breach the £20K aggregate annual contribution limit across all your ISAs.

As you recognise, there'd be penalties for any LISA withdrawals before 60 but if you have other sources of more accessible funds then this shouldn't be an issue.

Presumably you'll go down the S&S LISA route rather than the cash variant, given your 32 year horizon?

AlexDee

eskbanker wrote: »

Yes, you can open and pay into a LISA, as long as you don't breach the £20K aggregate annual contribution limit across all your ISAs.

As you recognise, there'd be penalties for any LISA withdrawals before 60 but if you have other sources of more accessible funds then this shouldn't be an issue.

Presumably you'll go down the S&S LISA route rather than the cash variant, given your 32 year horizon?

No chance of breaching the £20k limit at this point!! Thanks for the clarification.

Yes absolutely. I’d be looking at an S&S LISA as cash really seems daft for the 32 years I’d have to save.