Lifetime ISAs guide

Pjs11

Hi, I have a few questions
I have a few questions regarding the lifetime ISA. 

Firstly - if you place 4K in a lump sum into a paid monthly LISA will you then get the 1K in a lump sum instead of over the 12 months. 

Secondly - my partner and I are looking to buy beginning of next year. If I put the 4K in now/ over this year and get the 25% benefit and then put another 4K in say next January. Will I be able to have 25% on the 8K I’ve put in even if I put the other 4K in the 13th month, to then use say in February. 

Also if I use a LISA for my first house am I able to re-open another LISA later on in life to use for when I’m over 60
Thanks for your help

masonic

Pjs11 said:

Firstly - if you place 4K in a lump sum into a paid monthly LISA will you then get the 1K in a lump sum instead of over the 12 months.

The bonus is paid monthly, 1-2 months in arrears, based on what has been contributed in the relevant month. If you pay in a lump sum, then you'll receive the bonus as a lump sum.

Pjs11 said:

Secondly - my partner and I are looking to buy beginning of next year. If I put the 4K in now/ over this year and get the 25% benefit and then put another 4K in say next January. Will I be able to have 25% on the 8K I’ve put in even if I put the other 4K in the 13th month, to then use say in February.

If you put £4k in before 5th January, then the bonus will probably be added in time for the LISA to be used in February. However, if you leave it later, the bonus will not be received until late February or possibly the beginning of March if there was any delay.

Pjs11 said:

Also if I use a LISA for my first house am I able to re-open another LISA later on in life to use for when I’m over 60

Thanks for your help

You can only open another LISA while you are under the age of 40. There is no requirement to close your existing one though, so you could keep it open and transfer it to a S&S LISA for retirement after the house purchase.

grumiofoundation

Pjs11 said:

Hi, I have a few questions
I have a few questions regarding the lifetime ISA. 

Firstly - if you place 4K in a lump sum into a paid monthly LISA will you then get the 1K in a lump sum instead of over the 12 months. 

Secondly - my partner and I are looking to buy beginning of next year. If I put the 4K in now/ over this year and get the 25% benefit and then put another 4K in say next January. Will I be able to have 25% on the 8K I’ve put in even if I put the other 4K in the 13th month, to then use say in February. 

Also if I use a LISA for my first house am I able to re-open another LISA later on in life to use for when I’m over 60
Thanks for your help

Limits on lifetime ISA contribution are based on tax not calendar years - so you only have another 3 months to add this years contribution (must be made before the end of this tax year April 2021).
Any contributions made after that will count as next years (2021/22 tax year) contributions.

As masonic said above february might be cutting it fine if you pay in in January. But as explained above since contributions are based on tax years there is no need to wait until Jan 2022 to make your 2021/22 contribution. 

RobertKr

I've asked this question about using LISA on the general forum but I will repeat it here as it may generate more response:

" I've bought a house last year (FTB) but due to circumstances (wife was a student during the process (nurse), no fixed income, and as dependant was messing up with affordability), we decided to get a single income mortgage (only my name on the deeds). I had an HTB ISA (almost 12k!) at the time but the house price was slightly above 250k and I didn't get any bonus:(. I used also an HTB loan (affordability) and the mortgage is 5y fix.

Plan at the moment to remortgage in 4.5y time (using both incomes), in the process pays off/add to remortgage htb loan and add wife to the deed (she graduated/started full-time job as a nurse in the summer last year).

As far as I understand wife is still FTB (on the paper), she kept her HTB ISA (transferred to Halifax a few months ago;) as an emergency account.

As she is still below 40 she can open LISA, remortgage is 4y away, the house is (and is going to be for sure) below 450k price tag but can she use LISA (with bonus) when we remortgage (together)/pay htb loan/add her to the deed?

". The answers I've got so far was that it may be possible to use LISA if I sell part of the equity (my deposit?) and share part of the mortgage (when I have to remortgage in 5y time) with my wife. Apparently this phrase from LISA regulation gives this opportunity: "(4) The account investor must be purchasing as sole owner or as joint owner with another individual who may already own the property."

I understand that I have to use a conveyancer (quite likely two, one for my wife and one for myself) and my wife might have to pay stamp duty if the property value is too high (purchase price last year was 275k, new build, hard to predict price in 5y time).

What do you guys think about it?

eskbanker

This question comes up from time to time and I'm not aware of any definitive legal guidance, but there is an argument that the spouse of a property owner has a qualifying interest in the property by virtue of it being considered a marital asset, even if they're not named on the deeds or mortgage....

RobertKr

I hoped that someone tried to do it, and it was allowed (or refused) so I will know. As I said I remember wife has to sign bank some document (I don't remember exact wording)  that she has no interest in the property?.
This sentence "(4) The account investor must be purchasing as sole owner or as joint owner with another individual who may already own the property." could also mean to me that I own property (any) and therefore I am not FTB but my spouse still should be able to buy with me (and use her bonus) NEW property.
On the other hand, I've found this  -> "If I have a shared ownership property, can I use the LISA to 'staircase up'?

If it's just you wanting to 'staircase up' the amount you own, you can't use a LISA as you already own a share of a property.

Yet if you have a partner who's a first-time buyer, and meets all the other requirements above, they will be able to use the LISA and bonus to help you staircase up. Note that your partner will need to be named on the title deeds of the property to show they have used their LISA and bonus towards the purchase."

in LISA faq on moneysavingexpert   which is somehow similar (I know it's not exactly the same) situation.

Alexland

Rather than incur additional legal costs in doing a sale and purchase of part of your property it might be easier for her to just use her annual LISA bonuses for investing in S&S until age 60 from when it can be withdrawn without penalty.

bogleboogle

Now that Nottingham have reduced their interest rate from 1.25%/1.05% to 0.8%, does Moneybox have the highest rate currently available (1.1%)?
How does the Moneybox interest rate work? I understand it's comprised of a 0.6% rate + 0.5% bonus rate, the bonus only being awarded at the end of the 12 month period (then falling away, making the rate 0.6%). As the 0.6% rate is paid monthly, but the 0.5% monthly, doesn't that mean that you don't get monthly compounding for the full 1.1%?

grumiofoundation

bogleboogle said:

Now that Nottingham have reduced their interest rate from 1.25%/1.05% to 0.8%, does Moneybox have the highest rate currently available (1.1%)?
How does the Moneybox interest rate work? I understand it's comprised of a 0.6% rate + 0.5% bonus rate, the bonus only being awarded at the end of the 12 month period (then falling away, making the rate 0.6%). As the 0.6% rate is paid monthly, but the 0.5% monthly, doesn't that mean that you don't get monthly compounding for the full 1.1%?

It's 0.5% (variable) plus 0.6% bonus.

Explained in link below both are calculated daily but as you say bonus paid yearly. Looks like if you transfer or make unauthorised withdrawal (so implication is authorised withdraw - e.g. buying house assume you would get the pro rata interest? Maybe you wouldn't if you close the account but can just leave open with £1).

The compounding effect of the 0.6% over one year is miniscule.
For £4000 the difference in 0.6% paid daily (compounded) and paid yearly (not compounded) is 7p.

 https://www.moneyboxapp.com/faqs/how-does-the-cash-lifetime-isa-bonus-interest-rate-work-new/#:~:text=The 0.5% AER variable interest,with Moneybox for 12 months.

rhodesmjr

Does anyone have any positive or negative stories to share around transferring their cash LISA from Moneybox to Nottingham BS? I recall some negative comments around Nottingham BS a few pages back in this thread around issues and how long it took.

0.5% at Moneybox vs. 0.8% at Nottingham BS almost seems with the effort for me if it's going to be a smooth process. Wonder if it would get it transferred in time to start adding to the new one in April. Thanks for any comments!