Spending LISA

Davenixon

Hi there, I have a LISA and so does my fianc!e; both saving for first time home. We aim to buy using the help to buy scheme, so would only require 5% deposit. By the time we go to buy, we could have around about 20k in a Lisa ( if we both pay max contr this year and at start of next year)

What I wanted to know is, what can it be spent on. I believe the money gets transferred to solicitor, so let’s say, 12500 on 5% deposit, 900 for solicitors fees, 3000 for finishings e.g flooring and white goods ( companies around here offer This as a gold package) and then what happens to the rest, if, for example, stamp duty is covered by the builders. Does the left over after expenses get returned to you in cash?

I hope that makes sense? :money:

eskbanker

Davenixon wrote: »

What I wanted to know is, what can it be spent on.

It can only be used (without penalty) towards the purchase price of the property - money withdrawn for any other purpose (other than retirement), such as solicitors fees and fixtures and fittings, would incur a 25% deduction.

So, if you only plan to use £12,500 towards the actual property itself then don't put £20K into your LISA - clause 9B.42c(a) of the scheme rules defines:

the purchase price is the value required to be paid under the sale and purchase agreement entered into in connection with the acquisition of interest in the land (but, for the avoidance of doubt, this does not include consideration attributed to the purchase of any fixtures and/or fittings)

Check with your solicitor though, as, anecdotally, some may be prepared to turn a blind eye to the letter of the law and may allow broader use of LISA funds than envisaged by the rules, even though they have to make "a declaration that the amount withdrawn will only be released towards defraying the purchase price of the property".

Alexland

Also check your mortgage terms to determine if they would allow that money to be used towards buying the fixtures and fittings on completion. Unless you need to pay in advance in which case that's just you buying stuff.

Davenixon

Thanks guys! Appreciate the reply! We did think it would be the case of don’t put it all in. Shall keep it outside the Lisa