Help to buy

Cliffrugby124

My son is saving monthly in a help to buy scheme. Should he transfer in April to the lifetime ISA and incorporate what he has saved at the moment into the new lifetime ISA or keep it separate? Anyone got any advice would be greatly appreciated

Ollie_D

I'd suggest a read here http://www.moneysavingexpert.com/savings/help-to-buy-ISA
Particularly point 13

Chapuys

The main point is - will he be buying a house in the next 12 months after April 2017. If not, take the LISA (Lifetime ISA). If Yes, then keep the HTB Isa. You cannot get the 25% bonus with a LISA until you have had the account open 12 months. You can't have both I believe at the same time.

This is a better article about comparing both http://blog.moneysavingexpert.com/2016/04/01/the-help-to-buy-isa-v-lifetime-isa-which-should-first-time-buyers-get/

Rule No. 1 – Even if the Lifetime ISA is for you, open a Help to Buy ISA now anyway. The Lifetime ISA is the winner for many people because you can contribute more to it. However, even with that in mind, open a Help to Buy ISA now, as once the Lifetime ISA is available you can transfer the Help to Buy ISA into it. And as long as you do it within the first year you won’t use up that year’s Lifetime ISA allowance.

Rule No. 2 – If you’re planning to buy before April 2018, open a Help to Buy ISA not a Lifetime ISA. Lifetime ISAs won’t exist until April 2017, and even then the plan is you will have to have had it open a year before you can withdraw and get the bonus. So those planning to buy sooner should stick with a Top Help to Buy ISA.

However, if it gets to March 2018 (the end of the first year of Lifetime ISAs) and you still haven’t used the Help to Buy ISA to buy a home, then it’s worth moving it across to the Lifetime ISA (barring the caveats below).

Rule No. 3 – If you’re buying quickly, go for a Help to Buy ISA not Lifetime ISA. Even once Lifetime ISAs start, you have to have had the account for a year before you can use it towards a home. With the Help to Buy ISA you only need to have £1,600 in it to use it and get a bonus, so that’s just three months of maximum contributions (£1,200 month one, then £200 each month after).

Rule No. 4 – The Lifetime ISA allows you to buy a property of up to £450,000 anywhere in the UK. So, open a Help to Buy ISA now and transfer it across to the Lifetime ISA. You can buy a property up to £450,000 with the Lifetime ISA but only up to £250,000 with the Help to Buy ISA (except in London where it’s £450,000).

However, if you open a Help to Buy ISA now, and then transfer it into a Lifetime ISA in 2017, it’ll then obey the Lifetime ISA rules so you’ll be able to buy a property worth up to £450,000 with it (though again you won’t be able to actually use it before April 2018 because of the ‘you must have had it for a year before using it’ rule).

Rule No. 5 – Aged 16 to 18 – open a Help to Buy ISA now. You can open a Help to Buy ISA at age 16. You can’t open a Lifetime ISA until 18. So, for parents wanting to put money away for their children to buy a home in future, the Help to Buy ISA is the right vehicle and it can be transferred into a Lifetime ISA later.

The only slight difficulty is for those who won’t be 18 by 5 April 2018. That’s because you’re only allowed to transfer the Help to Buy ISA into a Lifetime ISA without it impacting your 2017/2018 £4,000 allowance in its first year (and the last date of that year is 5 April 2018).

So, if you did save for a couple of years for a 16-year-old, because they couldn’t get a Lifetime ISA, then they would effectively be losing some of their first year’s Lifetime ISA allowance. This isn’t the biggest deal in the world because you still have the savings and still have the bonus on top of it. Yet, it does somewhat reduce the way you can manipulate this.

Rule No. 6 – Aged 39+ – go for a Help to Buy ISA. You have to be aged under 40 to open a Lifetime ISA, and as the first time you can get one will be 6 April 2017, that means if you were born on or before 6 April 1977 then you won’t be able to get one. But the Help to Buy ISA doesn’t have an age limit.