Question on having a help to buy ISA and a LISA

AlphaSeed

Hello everyone!

I haven't been able to find this out so far in my research. Can you get both bonuses when saving in these IF you use the LISA for retirement and the help to buy for your first property? I would like to save with both.

Thanks!

ValiantSon

Yes. If you use the HTB for your house purchase and then draw from your LISA after you are 60 then you will get the bonus on both.

bowlhead99

Many people will think it smarter to use the LISA for the property purchase though, as it allows you to cash out a bigger bonus for your property, quicker. Getting 25% from the government towards your property, to spend on that property right now (well, in 2-3 years or whenever) is a superior annual rate of return to getting 25% from the government on top of your retirement funds in two to three decades time.

You could do that by transferring your existing HTB into the LISA by the end of this tax year and then when you do your property purchase, leave a few pounds in the LISA account to keep it going and carry on making contributions towards retirement once you've got the property purchase out of the way. Meanwhile your spare retirement money could go into a pension for a few years, rather than the LISA. Just a thought.

AlphaSeed

bowlhead99 wrote: »

Many people will think it smarter to use the LISA for the property purchase though, as it allows you to cash out a bigger bonus for your property, quicker. Getting 25% from the government towards your property, to spend on that property right now (well, in 2-3 years or whenever) is a superior annual rate of return to getting 25% from the government on top of your retirement funds in two to three decades time.

You could do that by transferring your existing HTB into the LISA by the end of this tax year and then when you do your property purchase, leave a few pounds in the LISA account to keep it going and carry on making contributions towards retirement once you've got the property purchase out of the way. Meanwhile your spare retirement money could go into a pension for a few years, rather than the LISA. Just a thought.

Thanks for your response.

So if you use the LISA toward the property purchase, ie saved £12k and the government gave me £4k. I could use that bonus then and carry on saving in it taking the bonus when I retire? I was under the assumption that once you used the bonus/LISA the account would be closed. Was I wrong?

Thanks again!

bowlhead99

AlphaSeed wrote: »

Thanks for your response.

So if you use the LISA toward the property purchase, ie saved £12k and the government gave me £4k. I could use that bonus then and carry on saving in it taking the bonus when I retire? I was under the assumption that once you used the bonus/LISA the account would be closed. Was I wrong?

Thanks again!

With a HTB ISA, the account does not contain the bonus. If you want to buy a property and use a bonus to do it, you close the account, get the closing paperwork off the ISA provider, then your solicitor applies for the bonus. So effectively it's an 'all or nothing' bonus in relation to a property purchase.

With a LISA though, the bonus is in the account as you go along (from Apr 2019 and beyond) and you don't have to close it if you want some money out of it.

If you withdraw from a LISA you have to be able to prove you are using it for a qualifying purpose (such as property purchase or any other event they add into the scheme, or generally being over 60) otherwise they will charge you a penalty which will be more than the bonus you got in the first place. But if you have (say) £12k contributions (£15k+ of balance including bonus and interest etc) or even £20k contributions (£25k+ of balance including bonus and interest) you are perfectly welcome to make a partial withdrawal for your property purchase and leave the rest saved / invested.

So you could withdraw any amount between £1 and your total account balance at that time (e.g. £15k+, £20k+ etc), and leave a bit left in the account to withdraw at some future date. Each of those withdrawals will be separately assessed on whether it's allowed to be penalty-free (i.e. is it a qualifying purpose or not).