LISA for house purchase & then retirement?

JustAnotherSaver

Just looking to check something...


So as i understand it you can open a LISA up so long as you're not yet 40 or older (forget the younger limit as that's been met in this case).


It can be used for retirement or house purchase.


So let's say for example it's being contributed to. The person turns 30. They buy their house & want to use what they've built up. Once that's all been used the account will be closed. They can then open another and contribute towards retirement, yes?


However let's say they're contributing and they don't buy a house until they're 40 (or older). They use their LISA pot to put to the house. What about retirement now? They're over 40 so unlike the scenario before they're out of luck, right?


Have i got it so far? Or since they already had one, can they open it again to continue for retirement?



So if it's a case of no, they're out of luck, then let's say they've built a pot of £20,000.
Could they then just use £19,999 towards the house so that the LISA remains open and they can then continue contributing towards the LISA for retirement?

eskbanker

The only way to open a LISA once 40 or over is for the purposes of transferring in an existing one, so it would be necessary to keep it open to retain ongoing rights - I'm not sure whether that actually necessitates keeping a token pound in but it would seem a sensible precaution and it's not as if an account would have a nice neat round figure balance anyway if open for over a year!

Even if under 40 it probably makes sense to keep the existing one open if looking to restart funding immediately, given the limitation of only being able to pay into one LISA in any tax year.

Perhaps worth noting that typically it would make sense to use a cash LISA to accumulate a property deposit but to transfer over to a S&S variant for retirement purposes, given the lack of penalty-free access until 60....

JustAnotherSaver

eskbanker wrote: »

Perhaps worth noting that typically it would make sense to use a cash LISA to accumulate a property deposit but to transfer over to a S&S variant for retirement purposes, given the lack of penalty-free access until 60....

Is what you're saying here...


Say your pot is £1000 & you're in year 2 or 3 or whatever (so you have some 'old money' in there from previous tax years).
Are you saying to avoid any complications regards using the cash LISA for the house then just simply transfer £1 (or some other small amount for those who don't like £1) to a S&S LISA from your 'old money' - and that way you would use the full cash LISA for the house and your S&S LISA would remain open and untouched, ready for you to contribute to after you've put the cash LISA towards a house?

masonic

JustAnotherSaver wrote: »

Is what you're saying here...


Say your pot is £1000 & you're in year 2 or 3 or whatever (so you have some 'old money' in there from previous tax years).
Are you saying to avoid any complications regards using the cash LISA for the house then just simply transfer £1 (or some other small amount for those who don't like £1) to a S&S LISA from your 'old money' - and that way you would use the full cash LISA for the house and your S&S LISA would remain open and untouched, ready for you to contribute to after you've put the cash LISA towards a house?

More likely eskbanker is suggesting you transfer all of the remaining funds to a S&S LISA after making a penalty free withdrawal from the cash LISA for the house purchase.

JustAnotherSaver

masonic wrote: »

More likely eskbanker is suggesting you transfer all of the remaining funds to a S&S LISA after making a penalty free withdrawal from the cash LISA for the house purchase.

Ahh i'm with you. The government bonus gets tagged on along the way with the cash LISA doesn't it, whereas the HTB ISA it gets put on somewhere near the end, when you're claiming the house. So for the HTB ISA you need to leave it in there whereas the cash LISA you can withdraw it and have the government 25% already paid in.