How to max out on LIsa and htb Isa

lb00

Hello everyone,
I am in my 3rd year of uni. I have no plan to buy a house in the next few years.
I was just wondering, in this time when interest is being cut everywhere, is there a way to save something important with these 2 products? How could i max out on them?

Thanks

bobobski

If I understand correctly, the best method is to open the HtB ISA now and max it out. Then open the LISA when it opens next year. Run the two concurrently for approximately 11 months, then "merge" (if that's the right word) your HtB into your LISA.

More info here: http://blog.moneysavingexpert.com/2016/07/25/24984/

Flobberchops

It's probably a good idea to open a HTB ISA if you have a lump sum of up to £1200 and/or are planning on putting away up to £200 a month - AND if you've already exhausted your options with interest-paying current accounts, regular savers, and reward accounts.

HTB ISA rates are typically considerably better than normal cash ISA rates, although that's not saying much, so you should preferentially use a HTB ISA if you qualify and don't have a a lump sum much bigger than £1200.

Bear in mind that LISAs may incur a penalty if not used to complete a house purchase, so they're perhaps not as much a no-brainer as HTB ISAs if your goal is primarily to earn interest and buying a house is a secondary consideration.

bobobski

Flobberchops wrote: »

Bear in mind that LISAs may incur a penalty if not used to complete a house purchase, so they're perhaps not as much a no-brainer as HTB ISAs if your goal is primarily to earn interest and buying a house is a secondary consideration.

First I hear of this (although admittedly I'm not paying a huge amount of attention) - why would there be a penalty for using a product for one but not both of its purposes?

jimjames

bobobski wrote: »

First I hear of this (although admittedly I'm not paying a huge amount of attention) - why would there be a penalty for using a product for one but not both of its purposes?

As I understand it there is no specific penalty for not using it to buy a house but if you want to access the money before pension age then you will pay an extra charge.

So it's partly true that you could be hit by a penalty - but only if you draw money out for reasons outside of pension or buying a house.

Ashen

The penalty/charge is if you withdraw it before age 60, not specifically pension age.

Ed-1

jimjames wrote: »

As I understand it there is no specific penalty for not using it to buy a house but if you want to access the money before pension age then you will pay an extra charge.

So it's partly true that you could be hit by a penalty - but only if you draw money out for reasons outside of pension or buying a house.

That is true from April 2017 but the Government is open to adding other lifetime events that would be penalty free to withdraw funds for, and also the possibility to loan funds from a LISA penalty free if the funds are repaid in full (similar to how Flexible ISAs work). It may be that some providers will offer that option if the Government allows for it in the future.