Lifetime ISAs guide

peter_333

MrMoneyman wrote: »

Can I just confirm something about the LISA.

If I open now with whatever the minimum amount is say £1 - £100, I can actually wait until next March and put in the £3900 - £3999 and then get the £1000 bonus in May 2018. Then I could pay another £4000 in April 2018 as soon as the new tax year opens and benefit from another £1000 the following month, so say May again or June 2018?

So by June 2018 I could have £10k total?

That's certainly my understanding of the situation. Unlike the HTB ISA, there is no mechanism to encourage "regular saving" in the LISA, and you're free to deposit lump sums at any time during the tax year.

pphillips

From what I understand the government bonus is paid at the end of the 2017/18 tax year, so for example if you put £4000 in at the end of March 2018, you would get the first £1000 government bonus soon afterwards.

Then if you put another £4000 in the middle of April 2018 you would get the second £1000 bonus from the government about a month later.

Then after many years when you get to 49, if your 50th birthday is on 7th April, you can invest £4000 on the 6th April and still get the full £1000 government bonus paid soon after you turn 50.

Please correct me if I am wrong but I can see no point in investing earlier than March 2018 unless you are about to turn 40 or want to buy your first house before April 2019

peter_333

pphillips wrote: »

Please correct me if I am wrong but I can see no point in investing earlier than March 2018 unless you are about to turn 40 or want to buy your first house before April 2019

If you've got the money just sitting around, and it's not earning elsewhere, then some may want to take the risk of investing in one of the S&S LISA options available, and hopefully get a benefit from compounding ROI. But yes, if the funds are currently earning good interest elsewhere (e.g. a high-interest cash ISA), then I see no real benefit in shifting it to the LISA till March next year.

Just make sure to open the LISA now, with minimum deposit, to get the 12-month countdown started.

pphillips

peter_333 wrote: »

Just make sure to open the LISA now, with minimum deposit, to get the 12-month countdown started.

Not sure what you mean by the 12 month countdown.

peter_333

pphillips wrote: »

Not sure what you mean by the 12 month countdown.

You can only get the government bonus on any LISA after you have had your LISA account open for 12 months. So:
- If you open the account April 2017, then you will qualify for your first bonus payment in April 2018
- If you do not open your LISA until February 2018, then you will not qualify for your first bonus payment till February 2019.

Hence, even if you're not intending to bulk fund the account till March next year, you are best to open the account today, so you can get the government bonus as soon as possible.

frankmassiebonsai

I'm not sure the above is quite right. I think the 12 month countdown refers to the minimum period needed to allow you to withdraw the money for a house purchase.

I'm fairly sure that the first bonus payment will be for all accounts in April 2018, for any deposits/transfers this financial year. After that the bonus payments will be made monthly.

peter_333

frankmassiebonsai wrote: »

I'm not sure the above is quite right. I think the 12 month countdown refers to the minimum period needed to allow you to withdraw the money for a house purchase.

I'm fairly sure that the first bonus payment will be for all accounts in April 2018, for any deposits/transfers this financial year. After that the bonus payments will be made monthly.

Yes, that's my understanding. I probably didn't phrase it quite correctly, but suffice it to say the earliest any LISA subscriber will be able to withdraw money from their account with government bonus included, is 12 months after they have opened the account.

(Remember, for LISAs opened via transfer from a LISA held with another provider, the 12-months is calculated from the opening of the first LISA in the transfer chain.)

masonic

Metalligator wrote: »

Am I not allowed to pay the full amount into HTB this year, (£2400) £4k into LISA, then transfer HTB next tax year?
My interest is paid in macrch so tight transfer window

There isn't any need to wait for the interest payment date. Any accrued interest will be paid as part of the transfer process. You cannot transfer the HTB ISA any later than 5th April 2018 (or it will all count against your £4,000 LISA limit in the next tax year). Anything contributed prior to the start of this tax year must be transferred by then for it not to count towards the £4,000 limit.

MrMoneyman wrote: »

If I open now with whatever the minimum amount is say £1 - £100, I can actually wait until next March and put in the £3900 - £3999 and then get the £1000 bonus in May 2018. Then I could pay another £4000 in April 2018 as soon as the new tax year opens and benefit from another £1000 the following month, so say May again or June 2018?

So by June 2018 I could have £10k total?

Yes.

Holmesy999

My worry with plonking money into a LISA as a tool for buying a house in one year + one more month to make some free cash (yes I will be looking at my buying my first home around then regardless of this scheme)

Ideally I would be a fool not to open one now with minimum investment to start the clock @£100, top up in march @£3,900, top up in April @£4,000 thus gaining a bonus of £2,000 in April 2018 when I purchase a house .

Issue is- can I use that £8,0000 that is tied up in my Lisa as my mortgage deposit, or will the mortgage company assess me as my deposit minus the £8,000 as it is tied up? That £8,000 will make the difference between a 20℅ deposit and a better interest rate vs a <20℅ deposit at a worse rate

asc1991

Holmesy999 wrote: »

My worry with plonking money into a LISA as a tool for buying a house in one year + one more month to make some free cash (yes I will be looking at my buying my first home around then regardless of this scheme)

Ideally I would be a fool not to open one now with minimum investment to start the clock @£100, top up in march @£3,900, top up in April @£4,000 thus gaining a bonus of £2,000 in April 2018 when I purchase a house .

Issue is- can I use that £8,0000 that is tied up in my Lisa as my mortgage deposit, or will the mortgage company assess me as my deposit minus the £8,000 as it is tied up? That £8,000 will make the difference between a 20℅ deposit and a better interest rate vs a <20℅ deposit at a worse rate

The mortgage company should count your LISA or H2B savings as part of your deposit.

However if you have a stocks and shares LISA (the only type currently available) that changes things as the value is not guaranteed. What if your mortgage is calculated on it being worth £8000 but then it crashed and is worth £5000 - it might lower your appeal to mortgage providers.