Lifetime ISAs guide

Anne12

Hi, I've just decided with my partner to buy a house next year around November. We both have H2B ISAs but are now wondering if it's worth transferring into LISA for the house buy. Please confirm or correct me if I'm wrong...
- I open the LISA (Moneybox cash) in September 2019.
- I transfer my H2B in September and top it up until April 2020 to £4000.
- by September 2020 I pay in another £4000.
Am I correct in assuming that in November 2020 I would have £8000 + £2000 (bonus) in my LISA (+ any interest) to use for a first buy house?

eskbanker

Anne12 wrote: »

Hi, I've just decided with my partner to buy a house next year around November. We both have H2B ISAs but are now wondering if it's worth transferring into LISA for the house buy. Please confirm or correct me if I'm wrong...
- I open the LISA (Moneybox cash) in September 2019.
- I transfer my H2B in September and top it up until April 2020 to £4000.
- by September 2020 I pay in another £4000.
Am I correct in assuming that in November 2020 I would have £8000 + £2000 (bonus) in my LISA (+ any interest) to use for a first buy house?

The short answer is yes, what you propose works.

If your HTB ISA is paying more than 1.4% interest then you'd be better to defer its transfer to the LISA until March 2020.

Alexland

ISA transfers take time and can be delayed so I really wouldn't leave it until March. If you don't intend to use your full £20k annual ISA allowance then it might be easier to just withdraw the HTB ISA money and contribute it to the LISA.

pixiedust09

Do I qualify for a Lisa?

I’m nearly 39, married and lived with my husband for 21 years. However, he bought our house before we were together and I’m not on the mortgage. Therefore do still qualify as a first time buyer, being as I’ve never owned a property in my name? If I do qualify for one, can I use this towards a house we buy together in the future? Thanks in advance.

masonic

pixiedust09 wrote: »

Do I qualify for a Lisa?

I’m nearly 39, married and lived with my husband for 21 years. However, he bought our house before we were together and I’m not on the mortgage. Therefore do still qualify as a first time buyer, being as I’ve never owned a property in my name? If I do qualify for one, can I use this towards a house we buy together in the future? Thanks in advance.

If the title deed and mortgage are in his name only, then you would still qualify as a first time buyer and could use a LISA if buying a future property together.

Aysee

Just wanted to clarify (and this has probably been covered, sorry).

I have a H2B ISA which I've had for quite a few years. It makes sense to put it into an LISA instead, as I don't need it as an emergency fund and i can start saving more. If I open up one today, can i transfer the full amount (£7000+ of the H2B ISA to the LISA, or is it only the money I've so far put into the H2B just for this tax year? Will the resulting bonus be paid in 12months from now, or at the end of the tax year?

I'm unlikely to buy in the next year. but who knows what can happen. Will i be able to open up the account, and hold off from transferring the full H2B ISA until March 2020 (before the start of the next?)

Current plan.
1. Open up Moneybox LISA for £1
2. Continue paying the H2B ISA (Halifax)
3. Transfer Everything to Moneybox (the £7000+) in march 2020
4. Top up with £4000 minus what I've paid into the H2B ISA this year.

eskbanker

Aysee wrote: »

I have a H2B ISA which I've had for quite a few years. It makes sense to put it into an LISA instead, as I don't need it as an emergency fund and i can start saving more. If I open up one today, can i transfer the full amount (£7000+ of the H2B ISA to the LISA, or is it only the money I've so far put into the H2B just for this tax year?

Neither - you can only put £4K into a LISA in any given tax year, regardless of whether this is new money or transferred from another (non-Lifetime) ISA.

Aysee wrote: »

Will the resulting bonus be paid in 12months from now, or at the end of the tax year?

Neither - LISA bonuses are paid about 4-8 weeks after each contribution.

Aysee wrote: »

I'm unlikely to buy in the next year. but who knows what can happen. Will i be able to open up the account, and hold off from transferring the full H2B ISA until March 2020 (before the start of the next?)

You can open a LISA now with £1 (worth doing to start the clock ticking) and defer the top-up to £4K until the end of the tax year, but, as above, that £4K is the absolute limit per tax year. Nothing to stop you putting £4K in during March (ensure you leave enough time) and then another £4K in April though....

Aysee

:doh: An incredible amount of misunderstanding on my part. Thank you.

So the way I work it out is that the max I can have in September is £10000 in the LISA (bonus included).

OR (if i keep adding to the £7000 i have)

£9400 + 3% + bonus £2350+ when closing an account (but only applicable to a mortgage deposit) when using the H2B.

The LISA will therefore only be a better option after April 2021. I've opened up a LISA for now, and at least I have a few months to think about it all.

eskbanker

Aysee wrote: »

The LISA will therefore only be a better option after April 2021.

It depends how you measure 'better'.

It's true that it's only after April 2021 that you'd be in a position to earn the government bonus on a larger amount in your LISA than in your HTB, but there are other factors too, such as the property value cap outside London (£250K for HTB, £450K for LISA), so if you were aiming to buy a property valued between these figures then 25% of whatever is in your LISA would be better than no bonus at all from the HTB!

Oasis1

NevvyC wrote: »

Nice one - thank you! I'm just conversing with a Moneybox rep via the app now I've downloaded it; ensuring there are no exit/closure fees of any kind etc. (which may negate the difference in interest between Skipton vs. Moneybox and ergo make transferring, fruitless..)

I understand that interest is paid monthly (still at rate of 1.4% AER overall...) but that must be nice to see the balance going up monthly! Plus, upon transferring away from Skipton the balance will be slightly higher due to the pro rata interest (still works out with 1% on that amount & 1.4 for the remainder of the year AER but psychologically, looking at a higher balance would be nice! :rotfl: )

Did you make a decision on this and if so, how did it go? I'm considering doing the same, though wondering if any other banks might throw their hat in the ring with some better rates...