LISA Clock

lauraa_taylor04

I am looking to open a LISA to "get the clock started"! However, does anyone know if I open this today, and want to transfer it to a cash LISA when they become available (say June), does the "1 year clock" start again when I transfer this in June?


All help greatly appreciated.

eskbanker

No, the clock doesn't reset when transferring between LISAs, see http://www.moneysavingexpert.com/savings/lifetime-ISAs#property5

kidmugsy

Unless you are going to turn 40 before 06/04/18, what's the hurry?

masonic

kidmugsy wrote: »

Unless you are going to turn 40 before 06/04/18, what's the hurry?

OP probably wants to make a penalty free withdrawal about a year from now.

Chapuys

masonic wrote: »

OP probably wants to make a penalty free withdrawal about a year from now.

You need to have the LISA open for a year or more to be able to use it for a home. If you plan to buy within a year, you are advised to stick with the Help to Buy ISA and start the Lifetime ISA ticking. Then if you do not buy within the year, shift the lot over to the Lifetime ISA (transfer) before April 2018.

truereddevil

I turn 40 on the 14th of may this year i already currently have an help to buy isa but this lifetime isa seems the better option for me.
I would rather have just a straight cash one instead of a stocks and shares one which is more risky, but looks like that won't happen before i'm 40 so whats my best options here
1.Leave my money in my help to buy isa until a straight cash LISA is on the market then transfer it
2.Open a LISA now and just put mimimum payments in it so then i have one going before i turn 40 then transfer it all in june if there is a cash one going like martin suggests

masonic

Chapuys wrote: »

You need to have the LISA open for a year or more to be able to use it for a home. If you plan to buy within a year, you are advised to stick with the Help to Buy ISA and start the Lifetime ISA ticking. Then if you do not buy within the year, shift the lot over to the Lifetime ISA (transfer) before April 2018.

That's exactly my point.

bowlhead99

truereddevil wrote: »

I turn 40 on the 14th of may this year i already currently have an help to buy isa but this lifetime isa seems the better option for me.
I would rather have just a straight cash one instead of a stocks and shares one which is more risky, but looks like that won't happen before i'm 40 so whats my best options here
1.Leave my money in my help to buy isa until a straight cash LISA is on the market then transfer it
2.Open a LISA now and just put mimimum payments in it so then i have one going before i turn 40 then transfer it all in june if there is a cash one going like martin suggests

Clearly option 1 doesn't work if this 'straight cash LISA' doesn't show up in the next month from now. If you don't open one before you are 40, you will not be able to have one. Which means you miss out on free house-buying bonus of 25% x the extra £1600 a year you can stuff into a LISA vs a HTB, which is £400 a year of free money until you buy a property. It also means you miss out on the flexibility of being able to use LISA as part of your overall retirement plan.

So, it would make financial sense to open a S&S LISA at some point in the next month before you turn 40, rather than missing out on the product. You could leave it a couple of weeks before deciding which one, no need to do it today.

Even if you put £1000 into a S&S LISA that you don't really want long term, and invested in something risky that lost 30%, and then hit you with a £30 transfer-out fee later this year... that's still only a £330 'cost', which is below the £400 extra *per year* of bonus money over the next few years that you can get by using LISA rather than HTB (because of larger allowable annual contributions).

So if you select somewhere with lower minimums than £1000, or invest in lower-risk investments, or use a place without a transfer-out fee, your potential cost from using the S&S is lower than that £330, and pales into insignificance compared to the extra free money you get by opening a LISA before you're too old and barred from doing so. And LISA as an additional retirement planning tool alongside pensions is useful too.

Chapuys

masonic wrote: »

That's exactly my point.

Sorry if I spoke out of line, you had just mentioned the penalty free withdrawal and that is for the tax year 2017/18 only. The 1 year wait will apply next year (and every year after that) when someone first opens a LISA. It is unlike the Help to Buy ISA which you can start claiming in as little as 3 months or so.

bowlhead99

Not sure if you're still at cross purposes.

- You can take out the money penalty free this year if you haven't had the bonus, but you won't get a bonus on it.

- If you have had the bonus you can't take it out penalty free unless you've had the account open a year and are going to use it to buy a qualifying property or are over 60. So Masonic's reference was to someone wanting to draw the money out late April 2018 or a little later with the bonus received.

- in all future years the rule about the account needing to have been open a year (counting time in previous LISA products pre transfer to your latest one) to allow penalty free withdrawal will still apply.

lamialex

I also turn 40 on the 10th of May and going to get an S&S LISA before, which one did you go for?