Lifetime ISAs guide

masonic

juniordoc wrote: »

Does anyone think this rule that you have to have had a LISA for one year in order to claim the bonus will result in a rush of people wanting to buy in April 18 who have been building their HTB/LISAs?
I can't really understand the rationale behind this rule either, particularly for those who have a HTB ISA balance to transfer into the LISA.....
Any thoughts?

I don't think people will wait another year to gain an extra £1000 from the Government. The price of a house could easily go up by several thousand while they wait. Many people would have to continue paying rent while waiting too.

darren72

So is it only Hargreaves Lansdown and Nutmeg that have said they will be launching the lifetime ISA's ?

masonic

darren72 wrote: »

So is it only Hargreaves Lansdown and Nutmeg that have said they will be launching the lifetime ISA's ?

There are plenty of others who have said they will be launching one, just not in time for the new tax year.

As well as the two you've mentioned, the expensive MoneyBox investing app will also have a LISA in place for the new tax year - not that anyone should use it.

Ashley_fletcher

I spoke to Barclays yesterday, they confirmed they will be opening a LISA, however, no date was given, nor the interest rate.

Ashley_fletcher

I just want to clarify the lifetime ISA, if someone can help me.
So the lifetime ISA, can be used for your first time property, with the added 25% of your savings. PLUS, once that money has been withdrawn for your first deposit, you can continue to pay into the account until you turn 50. And once you turn 60, you can withdraw the savings and receive another 25% bonus? Is this correct? Or do you only receive one 25% bonus?

Thanks

masonic

That's correct. The bonus is applied to all of your contributions.

jtodd

Hi there,

Just had a few questions/clarifications/opinions required:

Firstly, suppose I open a Help-to-Buy and I deposit £1,200 into it today and then £200 on April 1st and I correct in assuming I would be able to have a LISA limit for the 2017-2018 of £5,400 plus small amount of interest I receive from the help to buy ISA?

Would the government cash bonus be £1,350 or still just the £1,000?

The government bonus is then paid monthly after year, so are you saying that if I deposited £4,000 at the beginning of the 2018-19 tax year I would then receive a £83.33 government monthly bonus?

Also, from my perspective as I’m only 21 I imagine I would only use the LISA for a house deposit so is not supposing that the purchase of a house is a good investment decision (purely from a financial perspective?) Are house prices going to continue to rise forever?

Hypothetically, could I use LISA on deposit and then immediately sell the house again and simply gain the cash?

Likewise I’m fairly young so my expected salary won’t be that high is it wise to put my marginal savings into a LISA that has fairly high withdrawal costs? Obviously I will keep a small rainy day pot

masonic

jtodd wrote: »

Firstly, suppose I open a Help-to-Buy and I deposit £1,200 into it today and then £200 on April 1st and I correct in assuming I would be able to have a LISA limit for the 2017-2018 of £5,400 plus small amount of interest I receive from the help to buy ISA?

Would the government cash bonus be £1,350 or still just the £1,000?

You will get the bonus on the full amount of money paid in, including what has been transferred from the HTB ISA, so £1,350.

The government bonus is then paid monthly after year, so are you saying that if I deposited £4,000 at the beginning of the 2018-19 tax year I would then receive a £83.33 government monthly bonus?

My understanding is you'll get a £1000 bonus within a month or so of depositing the £4000.

Also, from my perspective as I’m only 21 I imagine I would only use the LISA for a house deposit so is not supposing that the purchase of a house is a good investment decision (purely from a financial perspective?) Are house prices going to continue to rise forever?

Usually it makes more sense (both financially and in terms of security of tenure) to buy a home and live in it rather than renting a home from a landlord. That isn't true in every case, or buying may not be realistic if you live in an area where property is unafforable.

What happens to house prices in the future is largely irrelevant, because the primary objective here is to own something that is potentially more expensive to rent over the long term. Any above inflation house price rises are the icing on the cake. House prices can also fall and take a long time to recover.

Hypothetically, could I use LISA on deposit and then immediately sell the house again and simply gain the cash?

The rules of the scheme are not finalised yet, but you would be skating on thin ice if you bought a home fully intending not to live in it.

Likewise I’m fairly young so my expected salary won’t be that high is it wise to put my marginal savings into a LISA that has fairly high withdrawal costs? Obviously I will keep a small rainy day pot

For retirement savings, it is likely that a workplace pension would be the priority due to the potential for employer matching and salary sacrifice. If you have no intention of buying a home, then it may be a better move to keep the HTB ISA.

jtodd

Thank you very much for all of that!

Owen1991

I'm opening this account anyway to use as a first time buyer.

However being in the military and not having to contribute to a pension, am i right in saying that this is an instance where its worth while using it for retirement too?