Lifetime ISA + H2B ISA | Government Bonus

MLogan

Hi all,
So. My wife and I are currently full steam ahead in saving for our first home. 2 years ago, my wife took out a H2B ISA in her name and we have been paying into it each month from our joint account. We are now in the position where we can open another ISA to help save. Here is my question.

If I were to take out a Lifetime ISA in my name, and again pay into it monthly from our joint account, when we were ready to buy, could we get the government bonus on both ISAs, as they are in different names? I realise that if you own both then you can only claim the bonus on 1 of them, but as they are in different names, then would be able to claim the bonus on both?

Thanks!

J

aj23_2

Short answer, no.

You can have a Help to Buy ISA and a Lifetime ISA, pay into both in the same tax year, but you can only claim the bonus from one of them when using for a mortgage (or deposit with Lifetime ISA)

If you both had Help to Buy ISA's, or both had Lifetime ISA's, you can claim/use the bonus from both. But you can't claim one bonus from one type and another bonus from the other and use them together.

You're likely to gain more from a Lifetime ISA as if you deposit £4000 before April, you'l get £1000 added. Do again in May, and again next April, your £12k becomes £15k within 14 months. A Help to Buy ISA would take nearly 5 years to fill in order to qualify for the max. £3k bonus.

Lifetime ISA
https://www.moneysavingexpert.com/savings/lifetime-isas/

Help to Buy ISA
https://www.moneysavingexpert.com/savings/help-to-buy-ISA/

MLogan

Thank you for your reply. So in this instance, as we have saved for 2 years with the current H2B ISA in my wife's name, it would be better for us at this stage for me to take out a H2B ISA in my name? So we can claim the bonus on both?

Thanks

eskbanker

I disagree with aj23, there is nothing to stop a couple buying their first property together, one using a HTB ISA and the other using a LISA, provided the purchase complies with the rules of both schemes.

MLogan

eskbanker wrote: »

I disagree with aj23, there is nothing to stop a couple buying their first property together, one using a HTB ISA and the other using a LISA, provided the purchase complies with the rules of both schemes.

That was my initial thought. Both ISAs will be in different names so surely we can both claim the bonus from each separately?

eskbanker

MLogan wrote: »

That was my initial thought. Both ISAs will be in different names so surely we can both claim the bonus from each separately?

Indeed, while there is a rule that prevents an individual from using both HTB and LISA bonuses when buying their first property, there is no such rule preventing a couple from using one of each.

Alexland

I also disagree with aj23, eskbanker is correct.

aj23_2

]Well it's correct for one person, I assumed it was for couples too, provided you meet the criteria. I.E. a HTB ISA can only be claimed for contribution toward the mortgage. A Lifetime ISA can be used as cash deposit or off the mortgage.

Neither Alexland nor Estbanker have acknowledged what I said that you'd be better off with two Lifetime ISA's if you can each afford to deposit £4k each per tax year between now and May 2020 if you're looking to buy relatively soon, you'd be £6k better off and can use it for deposit as well as mortgage, and up to £450k house price.

When I opened my HTB ISA in April 2016, I opened it purely for the interest. I knew it would take too long to fill to get the full bonus, and there's nothing for 20 miles around me less than £250k. It was good in theory, but unless you can find somewhere for less than £250k, both have the money to save the max and willing to wait 5 years to get the full bonus, it doesn't work for that money people.

I can afford both accounts, but for you as a couple, having two Lifetime ISAs would be far better than using a Help to Buy ISA and a Lifetime ISA, or two Help to Buy ISAs. You're just missing out on free money by not having one each. Having two HTB ISAs, don't forget the bonus on that is incremented depending on what you save, a Lifetime ISA bonus pays out in 6 weeks, cash.

I'd personally close the Help to Buy ISA and transfer it into a Lifetime ISA. You've got free money waiting to be added by doing so.

I've had £3k on bonuses from my Lifetime ISA in the last 11 months. £3k I didn't have before and do now by having opening a Lifetime ISA and depositing £4k and taking advantage of a one time special quirk which allowed me to transfer in my HTB deposits up to April 2017 to it as well.

eskbanker

I was simply correcting the factual inaccuracy rather than critiquing the post in its entirety but for the record, I agree that two LISAs is likely to be a better solution than one of each, in terms of being able to access a larger sum of free government money if OP and wife are able to take advantage of the higher annual LISA contribution limit, or if the HTB property value cap is relevant....

MLogan

So for clarity, we are all agreed that 2 Lifetime ISAs are best. However, with my wife having a maxed-out H2B ISA for the last 2 years, what would the advice be in that situation?

1) For my wife and I to both individually open Lifetime ISAs and for her to move her savings from the H2B into her Lifetime ISA?
2) For me to open a Lifetime ISA and max that out, while my wife continues to pay into her H2B ISA?

I guess it would probably be the first option but we won't be able to afford more than the £200 for the H2B, + maxing out the Lifetime ISA at the same time...

aj23_2

MLogan wrote: »

So for clarity, we are all agreed that 2 Lifetime ISAs are best. However, with my wife having a maxed-out H2B ISA for the last 2 years, what would the advice be in that situation?

1) For my wife and I to both individually open Lifetime ISAs and for her to move her savings from the H2B into her Lifetime ISA?
2) For me to open a Lifetime ISA and max that out, while my wife continues to pay into her H2B ISA?

I guess it would probably be the first option but we won't be able to afford more than the £200 for the H2B, + maxing out the Lifetime ISA at the same time...

Which is why I suggest you close the HTB ISA, and you both open individual Lifetime ISA accounts.

How much is in the HTB ISA? If it's £4k, you've already the current tax year deposit allowance sorted to open one and get £1k within 6 weeks. Any surplus and you can open one in your name with the difference and get a bonus on that too. Then, from April, it would be £333 a month each into a Lifetime ISA each. Or just lump it in at the end of the tax year.

That's the difference between the two ISA: HTB is a fixed cap per month which is not replaceable in the future. A LISA can be deposited to at any point in the tax year as little or often as you wish.