Lifetime ISAs guide

Alexland

If he has more than enough money to fill the LISA each tax year (try and use as much of this year's allowance as possible by 5th April) then the HTB ISA probably has an attractive interest rate for additional savings.

As above the HTB bonus isn't added into the account it is claimed at the end so there is no bonus to deduct back if the money is withdrawn.

EAB2

OK got it, thanks again 

an1179

eskbanker said:

an1179 said:

My daughter has a LISA with Skipton building society  and is purchasing her first home with no onward chain she had £5000 in her Skipton  LISA from 2018, she deposited £4000 on 14 February (the bonus has not yet been paid) and was intending to deposit £4,000 on 6 April but when would the bonus for the April payment be made approximately please (I think it would not be paid until May)

It'll be either late May or early June - as explained at https://www.skipton.co.uk/savings/isas/lifetime-isa, the bonus claim periods run from 6th of one month to 5th of the next.  Skipton then have 14 days from May 5th to make the claim and the government another 14 days to pay it, so it would be added to the LISA by June 2nd.

My daughter has had an offer accepted on a purchase, they wanted proof of her deposit which she provided stating that she wanted to complete after the LISA bonus was paid so she would benefit from an additional £1000 (for the February deposit).  The estate agent has said that she can proceed with the purchase BUT they will not be taking the house off the market due to the deposit being in the LISA, she said that she has got the complete  deposit without relying on the £1,000 bonus but the estate agent said it is common practice for a property to be kept on the Market when the deposit is in a LISA.  Is it common practice? 

Alexland

It sounds like they are using the LISA bonus as an obscure reason to keep trying to find a buyer willing to pay a higher price, more committed to the purchase, paying cash, etc.

When we bought our current house I was clear my offer was conditional on them taking the property off the market. They agreed but then didn't do it. Remember never trust estate agents as they are not on your side. They have possibility the lowest integrity of any profession.

I was very straight with them that I saw that as an act of bad faith and either the seller is happy with our offer or they are wasting our time and we would start looking elsewhere. I set them a 48 hour deadline to take the property off the market or the deal was off - which worked. It's a good test as if the seller wasn't committed it might fall through later after further time and cost.

Ultimately it's a negotiation and if you come in as a first time buyer, they assess you as inexperienced so play their games. I find it helps to come across as both indifferent (as you are confident there are plenty of suitable properties) but also very capable of proceeding in the right circumstances.

masonic

Agree completely with Alex. She should just tell them she won't be proceeding with the purchase until the house is taken off the market, and in the mean time she'll keep looking at other properties. Two can play at that game.

an1179 said:

she said that she has got the complete  deposit without relying on the £1,000 bonus

A £1000 bonus implies a £5000 LISA balance, so she'd presumably be withdrawing all of that and using it towards the purchase. If she has the extra £5000 for the deposit, and would be happy to retain the LISA to use for retirement, she could negotiate a lower offer that isn't contingent on using the LISA.

Perhaps this seller has already had a bad experience that has made them wary of the LISA/HTB ISA schemes, or the seller is just desperate to complete as soon as possible and foresees the LISA slowing the process down.

an1179

masonic said:

Agree completely with Alex. She should just tell them she won't be proceeding with the purchase until the house is taken off the market, and in the mean time she'll keep looking at other properties. Two can play at that game.

an1179 said:

she said that she has got the complete  deposit without relying on the £1,000 bonus

A £1000 bonus implies a £5000 LISA balance, so she'd presumably be withdrawing all of that and using it towards the purchase. If she has the extra £5000 for the deposit, and would be happy to retain the LISA to use for retirement, she could negotiate a lower offer that isn't contingent on using the LISA.

Perhaps this seller has already had a bad experience that has made them wary of the LISA/HTB ISA schemes, or the seller is just desperate to complete as soon as possible and foresees the LISA slowing the process down.

The LISA has £9,000 and waiting for the £1,000 top up plus money in other accounts to make up more than the deposit, we've not got £10,000 to spare,  it seems to be the £1,000 top up that's the problem but they will not accept the £1,000 as part of the cash deposit (which is available).   The vendor  has not yet got a property to purchase. 

Alexland

The £1k is not the problem. They are making up rules to suit their purpose. If you have already offered to provide £1k alongside the £9k that proves it.

There is nothing in the LISA rules to say she couldn't use £9k from the LISA towards the property purchase and then when the £1k comes through leave it in a LISA wrapper until retirement at age 60 if she wanted to.

This problem is nothing to do with LISAs its that the seller hasn't really accepted the offer and taken the property off the market. They are trying to sit on the fence as a potential timewaster. My view is this is better flushed out early whatever the outcome.

kimmylee

Alexland said:

LISA to LISA transfers don't count against the £4k contribution limit. The old provider would tell the new provider how much you have subscribed in the current tax year (sounds like £0) and the new provider would allow you to continue to subscribe until you reach the limit.

Hello,
If you transferred £4k from a cash ISA to LISA does this count towards the contribution limit? Does this mean I would still get the bonus, or does it have to be new money going in?
What about withdrawing £4k from a cash ISA to deposit in the Lifetime ISA? I am not near the £20k annual ISA limit this year. Does this make sense?

eskbanker

kimmylee said:

Alexland said:

LISA to LISA transfers don't count against the £4k contribution limit. The old provider would tell the new provider how much you have subscribed in the current tax year (sounds like £0) and the new provider would allow you to continue to subscribe until you reach the limit.

If you transferred £4k from a cash ISA to LISA does this count towards the contribution limit?

Yes.

Does this mean I would still get the bonus, or does it have to be new money going in?

The bonus is payable based on all deposits, whether new money or transfers from other ISAs.

What about withdrawing £4k from a cash ISA to deposit in the Lifetime ISA? I am not near the £20k annual ISA limit this year. Does this make sense?

It'll probably stand a better chance of completing by the end of the tax year that way....

kimmylee

eskbanker said:

kimmylee said:

Alexland said:

LISA to LISA transfers don't count against the £4k contribution limit. The old provider would tell the new provider how much you have subscribed in the current tax year (sounds like £0) and the new provider would allow you to continue to subscribe until you reach the limit.

If you transferred £4k from a cash ISA to LISA does this count towards the contribution limit?

Yes.

Does this mean I would still get the bonus, or does it have to be new money going in?

The bonus is payable based on all deposits, whether new money or transfers from other ISAs.

What about withdrawing £4k from a cash ISA to deposit in the Lifetime ISA? I am not near the £20k annual ISA limit this year. Does this make sense?

It'll probably stand a better chance of completing by the end of the tax year that way....

Hi eskbanker

Thanks for your super quick reply! I also got an email today from Moneybox confirming the same.
It's worth mentioning some other info for those considering opening a Moneybox cash LISA:

A Lifetime ISA transfer takes up to 30 days, it really depends on the provider. There is no real need for it to be done before the tax year end, it doesn't make any material difference when it is from another Lifetime ISA.

A Cash ISA transfer should be 3 weeks, but if you were to withdraw it would need to be added to our weekly collection by 1 April to be in time for this tax year.