So I have £30,000 sitting around

buglawton

Here's the article preview that describes OPs situation to a tee and names the 2 lenders. You can read the whole article for free by registering.
http://www.telegraph.co.uk/money/money-makeover/money-makeover-undergrad-aged-21-should-take-mortgage-get/

elephantrosie

Glen_Clark wrote: »

Many people save wisely like you have, put it in the Stock market when they see how much others have made because the market is high (like it is now)... the market falls..... they get bitten..... so they sell at a loss and never buy shares again.
But thats unlikely to happen if you invest for at least 5 years, and don't lose your nerve and sell when it dips.

the problem is almost everyone loses their nerves when market dips. especially if one is a beginner investor.

i have learnt not to look at more volatile investments everyday! lol

elephantrosie

Voyager2002 wrote: »

As a student, the best investment you can make is in your career and hence your future earning power. So a good use of that money would be things like study time (not needing to take a job when you need to hit the books); financing a good internship; and of course meeting accommodation costs when a good opportunity arises in an inconvenient place. So I suggest keeping most of your money liquid until you are established in your first graduate job. At that point, look very seriously at a help-to-buy ISA since buying a home is likely to be your next move.

best advice ever

elephantrosie

Alexland wrote: »

The problem I see with the LISA if the OP is looking to buy in 2022 is that 4-5 years is too long to be on the Skipton cash LISA where the low interest rate on the whole balance starts to errode the additional bonus on the extra contributions but too short to be in stocks and shares where even a balanced portfolio of different assets classes could suffer a 25% drop at a bad moment. Unless the OP was willing to accept the risk of a market drop (property prices might drop too) or delay their purchase until a recovery?

4- 5 years is enough. you get 25% bonus on top of it , even if the interest rate is 0 by skipton, still make it worthwhile

TheShape

Alexland wrote: »

The problem I see with the LISA if the OP is looking to buy in 2022 is that 4-5 years is too long to be on the Skipton cash LISA where the low interest rate on the whole balance starts to errode the additional bonus on the extra contributions but too short to be in stocks and shares where even a balanced portfolio of different assets classes could suffer a 25% drop at a bad moment. Unless the OP was willing to accept the risk of a market drop (property prices might drop too) or delay their purchase until a recovery?

elephantrosie wrote: »

4- 5 years is enough. you get 25% bonus on top of it , even if the interest rate is 0 by skipton, still make it worthwhile

elephantrosie, Alexland is correct that the LISA becomes less attractive over time.

Assuming the same amount saved in both, ie the max LISA subscription, a cash LISA at 0% interest would have a lower overall return than a HTB ISA @ 2% and any other savings account @ 2% over 5 years.

A rough calculation for monthly savings into a cash LISA @ 0.75% vs HTB ISA @ 2.5% + any other 2.5% account (for the difference between the max HTB subscription and the LISA subscription) gives a roughly similar return over 5 years. The LISA comes out slightly ahead and a lump sum at the start of each year would improve the outcome a little.

Any longer than 5 years and/or a better savings rate on the additional savings, the LISA becomes less and less attractive.

Anyone trying to decide between the LISA and a HTB ISA needs to do some calculations.

elephantrosie

TheShape wrote: »

elephantrosie, Alexland is correct that the LISA becomes less attractive over time.

Assuming the same amount saved in both, ie the max LISA subscription, a cash LISA at 0% interest would have a lower overall return than a HTB ISA @ 2% and any other savings account @ 2% over 5 years.

A rough calculation for monthly savings into a cash LISA @ 0.75% vs HTB ISA @ 2.5% + any other 2.5% account (for the difference between the max HTB subscription and the LISA subscription) gives a roughly similar return over 5 years. The LISA comes out slightly ahead and a lump sum at the start of each year would improve the outcome a little.

Any longer than 5 years and/or a better savings rate on the additional savings, the LISA becomes less and less attractive.

Anyone trying to decide between the LISA and a HTB ISA needs to do some calculations.

but you have not taken into consideration of the bonus contributed by the government at 25%

TheShape

elephantrosie wrote: »

but you have not taken into consideration of the bonus contributed by the government at 25%

I did include the government bonus, adding it monthly for the LISA and at the end for the HTB ISA.

Alexland

elephantrosie wrote: »

but you have not taken into consideration of the bonus contributed by the government at 25%

You get the 25% bonus with both the HTB and the LISA. The problem with saving for too long in the cash LISA is that the additional 25% bonus (from the higher contribution limit) is erroded by the lower interest rate on the entire LISA balance. House purchases rarely happen earlier than people initially expected.

Alex

Yazi

Alexland wrote: »

The problem I see with the LISA if the OP is looking to buy in 2022 is that 4-5 years is too long to be on the Skipton cash LISA where the low interest rate on the whole balance starts to errode the additional bonus on the extra contributions but too short to be in stocks and shares where even a balanced portfolio of different assets classes could suffer a 25% drop at a bad moment. Unless the OP was willing to accept the risk of a market drop (property prices might drop too) or delay their purchase until a recovery?

I am thinking about changing to LISA as it has a higher limit of £450000 for a house while HTB is £250k (which is almost impossible in my area, Cambridge) but I need to find out more information about this and how to calculate it

Yazi

buglawton wrote: »

Here's the article preview that describes OPs situation to a tee and names the 2 lenders. You can read the whole article for free by registering.
http://www.telegraph.co.uk/money/money-makeover/money-makeover-undergrad-aged-21-should-take-mortgage-get/

I was interested in this idea, however to afford a student house (my university area is Hatfield) I would need more than £35k that I have and it could be too risky if I can't get payments for the mortgage as I don't have a steady income. It's interesting though! And good as you don't have to pay council tax.