Lifetime ISA and Cash ISA for first-time buyer

HelenTurnblad

Hi there,

I’m wondering if anyone with much more experience than myself could help a first-time buyer with some deposit-savings questions? I’m looking to buy with my partner in the next three-four years. We both have zero savings so starting from scratch. After lots of research, it seems LISA is the better option over Help To Buy ISA. I’m aware you can pay into these simultaneously but only claim the bonus from one (most likely LISA) and still use the savings from Help To Buy towards first property (as long as it doesn’t exceed £4,000 annual LISA limit). I’m wondering do the same rules apply if you were to transfer money from a cash ISA into a LISA? Can you even use Cash ISA and LISA to buy your first home? After searching high and low on Google, there doesn’t seem to be an answer anywhere. We’re buying in London so looking to save more than £4K a year so are we better off forgoing LISA (and the 25% bonus) and saving for a deposit in a regular cash ISA? Any insight would be v much appreciated! TY Helen

Chapuys

I am currently using a Lifetime ISA and a Cash ISA to save my deposit.

A Help to Buy ISA is just a special Cash ISA with an added 25% bonus and very limited deposits.
A Lifetime ISA is a special type of ISA, and not a Cash ISA, with a 25% bonus with larger limited deposits.
You are right, you can have both Help to Buy ISA and a Lifetime ISA but you cannot claim both bonuses. The Lifetime ISA is clearly the better if saving for more than a 1 year.
A Cash ISA is just a normal Cash ISA. Nothing special except for the £20,000 limit, which applies across all ISAs you contribute to that year - including the Lifetime ISA.

If you have a Lifetime ISA and a normal Cash ISA (not Help to Buy) then the normal Cash ISA doesn't have a bonus, just interest over the year. You can use a Cash ISA to buy anything you like, a doughnut, a horse, a house. Its just a tax free savings account. Nothing special and that doesn't affect a Lifetime ISA as that isn't a Cash ISA.

So yes, you can use both a Lifetime ISA and a Cash ISA (non-Help to Buy) to buy a house.
You can also transfer between a Cash ISA and a Lifetime ISA (I did it at Skipton this year) but it would take part of your yearly £20,000 limit, I believe, unless you do an official transfer using an ISA transfer form. You would still be limited to transferring £4,000 into a Lifetime ISA per year though.

I am happy to be corrected on any points, if I got anything wrong.

[Deleted User]

Skiptons LISA is fab. Definitely open one asap so the 12 month maturity date gets moving

Other than that a 12 month regular saver at the same time will both mature at the same time.

Good luck