Lifetime ISAs guide

WillPS

I think with hindsight it was a mistake to sunset the Help to Buy ISA system; they should have just dropped the £12k limit and increased the eligible property price. The slow drip-feed was enough of a deterrent against withdrawal, IMHO.

It'll be interesting to see what happens about it all now anyway; it could sort of go either way - either they improve it and sort the penalty/max property price issues out, or they should close the gates to it.

Dorian1958

Prior to leaving the UK, one of my children opened a LISA with the intention of one day buying a property, having previously rented for many years.  Their home UK address is now listed as mine.  It's uncertain when they will return, perhaps in 2/3 years time.  Are there any eligibility issues here?  Could they buy a property using a LISA with the intention of living in it on return, even though the return date is as yet open ended?

masonic

Dorian1958 said:

Prior to leaving the UK, one of my children opened a LISA with the intention of one day buying a property, having previously rented for many years.  Their home UK address is now listed as mine.  It's uncertain when they will return, perhaps in 2/3 years time.  Are there any eligibility issues here?  Could they buy a property using a LISA with the intention of living in it on return, even though the return date is as yet open ended?

Leaving the country and then returning does not affect eligibility. It would only be a problem if they owned property at any point.

badger09

Dorian1958 said:

Prior to leaving the UK, one of my children opened a LISA with the intention of one day buying a property, having previously rented for many years.  Their home UK address is now listed as mine.  It's uncertain when they will return, perhaps in 2/3 years time.  Are there any eligibility issues here?  Could they buy a property using a LISA with the intention of living in it on return, even though the return date is as yet open ended?

What do they intend to do with the property until they return to UK in 2-3 years?

They would also need to consider the 2% SDLT surcharge (England & NI) if they buy while non resident. 

masonic

badger09 said:

Dorian1958 said:

Prior to leaving the UK, one of my children opened a LISA with the intention of one day buying a property, having previously rented for many years.  Their home UK address is now listed as mine.  It's uncertain when they will return, perhaps in 2/3 years time.  Are there any eligibility issues here?  Could they buy a property using a LISA with the intention of living in it on return, even though the return date is as yet open ended?

What do they intend to do with the property until they return to UK in 2-3 years?

They would also need to consider the 2% SDLT surcharge (England & NI) if they buy while non resident. 

Not just that, they would likely be unable to get a residential mortgage, where you usually need to declare that you will be living in the property once purchased, and a residential mortgage is needed to qualify for the LISA penalty free withdrawal. So best left until they are back in the UK I would think.

tuxedomoggi

The Moneybox LISA is being recommended as the best cash LISA, but it's rate drops by 1% at the end of the first year.  My son has had his LISA for 3 years, so has been getting the lower rate for 2 years (currently 4% variable).  He has used the full allowance each year, so has around £15k.  He's likely to buy a property within the next 1-5 years, so investing in stocks and shares might be unwise, but nevertheless I'm thinking of suggesting that he transfers to the Dodl S&S LISA, which has a 5.09% AER variable interest on cash, and a fee of 0.15% a year (min £1 a month). Am I correct in thinking this is equivalent to an interest rate of 5.09 - 0.15 = 4.94%?  Before I suggest it I want to make sure I'm not missing any hidden disadvantages of the switch.

masonic

tuxedomoggi said:

The Moneybox LISA is being recommended as the best cash LISA, but it's rate drops by 1% at the end of the first year.  My son has had his LISA for 3 years, so has been getting the lower rate for 2 years (currently 4% variable).  He has used the full allowance each year, so has around £15k.  He's likely to buy a property within the next 1-5 years, so investing in stocks and shares might be unwise, but nevertheless I'm thinking of suggesting that he transfers to the Dodl S&S LISA, which has a 5.09% AER variable interest on cash, and a fee of 0.15% a year (min £1 a month). Am I correct in thinking this is equivalent to an interest rate of 5.09 - 0.15 = 4.94%?  Before I suggest it I want to make sure I'm not missing any hidden disadvantages of the switch.

It says "0.15% of the value of your investments", so I suspect, as is the convention with S&S ISAs, that uninvested cash won't be counted, so likely £1 per month, which would make the current rate about 5.01%. Worth confirming. If the rate on cash drops to an unacceptable level, then he might also have the option of investing in a money market fund, which would get him close to BoE base rate, this time less the 0.15% fee (I'm not sure what is included in the Dodl range).

tuxedomoggi

masonic said:

tuxedomoggi said:

The Moneybox LISA is being recommended as the best cash LISA, but it's rate drops by 1% at the end of the first year.  My son has had his LISA for 3 years, so has been getting the lower rate for 2 years (currently 4% variable).  He has used the full allowance each year, so has around £15k.  He's likely to buy a property within the next 1-5 years, so investing in stocks and shares might be unwise, but nevertheless I'm thinking of suggesting that he transfers to the Dodl S&S LISA, which has a 5.09% AER variable interest on cash, and a fee of 0.15% a year (min £1 a month). Am I correct in thinking this is equivalent to an interest rate of 5.09 - 0.15 = 4.94%?  Before I suggest it I want to make sure I'm not missing any hidden disadvantages of the switch.

It says "0.15% of the value of your investments", so I suspect, as is the convention with S&S ISAs, that uninvested cash won't be counted, so likely £1 per month, which would make the current rate about 5.01%. Worth confirming. If the rate on cash drops to an unacceptable level, then he might also have the option of investing in a money market fund, which would get him close to BoE base rate, this time less the 0.15% fee (I'm not sure what is included in the Dodl range).

Interesting - thanks! In that case Dodl's LISA cash rate seems to be better than the first year of the Moneybox LISA (currently 5% variable).  But yes, we'd need to keep an eye on it in case it's just a promotional rate to draw people in.

Driver158

Hi.
Apologies if this has already been asked but after a quick scan I can’t find an answer.

I have a Moneybox LISA which I will have had for 12 months come July.

Now we’re in the new tax year, I have another £4k to deposit into a LISA, but I note Tembo has a greater rate currently, and my Moneybox rate is due to drop around July too.

As I’m looking to purchase my first property after July, I’m conscious that any money used towards the purchase of the house must be from a LISA that’s had funds in it for over 12 months. So, could I open a Tembo LISA for the greater rate, then transfer the money from this into my Moneybox LISA when I’m ready to purchase? That way all the money for buying the property will come from a LISA that’s had funds in it for at least 12 months. Is this legitimate?

Thanks in advance.

eskbanker

Driver158 said:

As I’m looking to purchase my first property after July, I’m conscious that any money used towards the purchase of the house must be from a LISA that’s had funds in it for over 12 months. So, could I open a Tembo LISA for the greater rate, then transfer the money from this into my Moneybox LISA when I’m ready to purchase? That way all the money for buying the property will come from a LISA that’s had funds in it for at least 12 months. Is this legitimate?

The 12 months starts from first opening a LISA, and transferring doesn't affect that, so the balance can be transferred and accessed without penalty from 12 months after opening the first LISA.