Lifetime ISAs guide

Alexland

But regular savers are fiddely and expire after a year so a LISA would be better.

Lingua

Show me a regular saver that can accept £4000 of deposits and which has an interest rate high enough to provide 5% of return on that sum over a sustained period of five years (around 10-11%?)

I'm wanting to use my LISA in 2020/2021, so hoping to have a good few thousand £ of bonus, but just hoping nothing changes in the interrim!

billymadbiker

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LISA Questions..

Hi all,
I have just (yesterday) opened a Skipton cash LISA. This is my first isa/savings account.
I turned 39 3 weeks ago.
I have opened the Lisa account with £1.
I will transfer the remaining £3999 before April 2018.

Plan is to gain the 25% bonus to use towards a ftb house purchase in the next 3-4 years. I am self-employed so also intend to use the Lisa as my (currently only) pension savings fund.

I have the following questions if anyone can help me out?

1: Can I also open a ftb/htb isa today with £1000, then pay in the £200 pm until March next year and transfer the £2k into my Lisa gaining me an extra £500 bonus? (I am presuming I am unable to open a 2nd isa in this same tax year so it's a no-go?)

2: I deposit £3999 in the Skipton Lisa March 2018. April 2018 I then deposit another £4000. So by may 18 I should have £10k in the Lisa account. I will not be able to use this for a house purchase until October 18 (as that's the 1yr the Lisa will have been open for) if I waited to buy until May 2019 I could have £15k available then? Is this correct?

3: April 2018 - I can open a s&s LISA alongside my cash LISA?
Can I also pay £4k into this? (So total of £8k a year)!
Will I also attract a 25% bonus on this 2nd Lisa?
If so, could somebody continue to open one new Lisa each tax year?
(I realise I personally won't as I will by over 40 by 2019)
My theory behind having the 2nd Lisa as s&s is to start using that one for my pension. If I don't end up buying a house I would transfer the funds from the cash LISA into it for longer term investment

4: If I don't buy a house and transfer the funds from a cash lisa into a s&s LISA I presume the 25% bonus also gets transferred across and I get to keep it (withdrawable at 60)

5: My partner is not currently working so the house purchase is intended to be in my name only (sole applicant for mortgage) If they also open a cash lisa will we be able to use the bonus from that against a property?

Thanks in advance for any help!!

eskbanker

billymadbiker wrote: »

1: Can I also open a ftb/htb isa today with £1000, then pay in the £200 pm until March next year and transfer the £2k into my Lisa gaining me an extra £500 bonus? (I am presuming I am unable to open a 2nd isa in this same tax year so it's a no-go?)

No, anything transferred from a HTB ISA into a LISA counts towards the £4K annual LISA limit (except for HTB contributions made before this tax year, which obviously wouldn't apply to your scenario). You could open a HTB ISA alongside a LISA but you can't claim a 25% bonus towards a house purchase on both, so the obvious choice is to use the higher amount available in a LISA.

billymadbiker wrote: »

2: I deposit £3999 in the Skipton Lisa March 2018. April 2018 I then deposit another £4000. So by may 18 I should have £10k in the Lisa account. I will not be able to use this for a house purchase until October 18 (as that's the 1yr the Lisa will have been open for) if I waited to buy until May 2019 I could have £15k available then? Is this correct?

Yes (plus a bit of interest as well as the £15K).

billymadbiker wrote: »

3: April 2018 - I can open a s&s LISA alongside my cash LISA?
Can I also pay £4k into this? (So total of £8k a year)!
Will I also attract a 25% bonus on this 2nd Lisa?
If so, could somebody continue to open one new Lisa each tax year?
(I realise I personally won't as I will by over 40 by 2019)
My theory behind having the 2nd Lisa as s&s is to start using that one for my pension. If I don't end up buying a house I would transfer the funds from the cash LISA into it for longer term investment

You can only pay a maximum of £4K per year into LISAs, so the rest becomes irrelevant - there isn't the concept of running a 'pension LISA' alongside a 'house LISA' as two separate entities, but you probably ought to consider a proper pension anyway, see https://www.moneysavingexpert.com/savings/lifetime-ISAs#pension2 for further details.

billymadbiker wrote: »

4: If I don't buy a house and transfer the funds from a cash lisa into a s&s LISA I presume the 25% bonus also gets transferred across and I get to keep it (withdrawable at 60)

Yes.

billymadbiker wrote: »

5: My partner is not currently working so the house purchase is intended to be in my name only (sole applicant for mortgage) If they also open a cash lisa will we be able to use the bonus from that against a property?

No.

Lingua

I'm hoping to use the LISA to buy a property as soon as I finish university. My only concern is that I won't be able to find a mortgage as I'll be newly-employed

It's interesting because someone who buys a property in a corporate structure can still use the LISA to buy their own home should they be buying their first property as an individual.

Lingua

Alexland

Even if your partner is not working you could each have a LISA and gift them the 4k each year and buy the property jointly. It could still be a joint mortgage buying jointly using both lisas. The max loan would still be based on your income and outgoings.

billymadbiker

I don't need to gift her the money, she has enough savings to pay in £4k a year.

I don't know if a lender would allow her to be added to a mortgage with no income though?
Obviously if she had a Lisa she would be providing part of the deposit but not making any of the repayments.

The t&c's of the Lisa say she would need to be buying with a mortgage to claim the bonus?

Lingua

Might be worth weighing up the benefits and the negatives. Realistically, is the bonus on the LISA going to be enough to potentially end up with a higher interest rate (paying more back over time), or require a higher deposit etc.? If it is going to make finding a mortgage harder, it might be easier to go with one LISA and use the other money as a bigger deposit, or to renovate the property to your liking.

Lingua

Alexland

@billymadbiker yes your partner would need to be buying the property with you to use their LISA and most if not all lenders would need them to be named on the mortgage.

I don't see why a lender would not allow a joint mortgage based only on your income but that might be a question for the MSE mortgage experts.

Alex

Fordy51

Hi all.

I am in a predicament.

I have a total of £6000.

I am looking for the best return through a help to buy scheme.

Now i have no ISA at all. All my workings out are based on not needed the money for 12 month's
I need clarification which isa scheme to use

Through a help to buy isa
Deposit £1200 now
Monthly £200 over 12 months
H2B ISA Total £3600 + any interest aer%
Gov 25% = £900
Overall Return from H2b ISA inc gov £4500 excluding the AER for examples
Add the rest of the 6000 i couldnt deposit in £2400

Outcome £6900

LISA option
Deposit £4000 now
Monthly £167
Total after 1 year £6000 - lets not even think about the 0.5% interest
Gov 25% £1500

Outcome = £7500

From where i sit the LISA is the best option as this gains £600 over a H2B isa.
Am i correct in these calculations or am i missing anything? I've literally only spent today looking into these ISA's