Lisa & h2b

JonB7

I'm sure there's been many of these kind of questions, but I'm looking for some specifics.

I've only just recently opened a H2B ISA - it currently has £1600 in it.
I'm basing my question on the theory that I will buy a house 2 years from now.

Is it worth going for a LISA and putting the max in there for the next 2 years (£4000 a year), which should give me about £10150 (including the £1000 a year and interest) and either:
- contribute to the H2B and then make a judgement call about which to use to buy a house (the knock-on effect of using the H2B being that the LISA would have to be used for retirement, whereas if I used the LISA, I could withdraw the H2B with no penalty)
OR
- get rid of the H2B and be able to contribute more into a standard ISA on top of the LISA.

Or is it better just to have the H2B (which I think would leave me with £8100 [including the 25% bonus and interest] after 2 more years) and put more money in a pension rather than a LISA.

I'm also trying to weigh in the fact that the max house price with a H2B is 250,000, but £450,000 with a LISA.

My brain is fried trying to work out which option will leave me better off!



I also have a probably-silly question about the ISA allowance. When it says 'per year', I assume that means you can theoretically have more than £20000 in the account, you just can't contribute more than that figure in one tax year?



Thanks for your help wading through this!

george4064

Good read here on LISAs vs HTB ISAs: https://www.moneysavingexpert.com/savings/lifetime-isas/#property-6


I would suggest you transfer your HSB ISA to a LISA and go with that.


Some questions I cannot answer because it depends on your circumstances such as how you prioritize buying your first property vs pension etc...


RE: question around ISA allowance, you have understood it correctly.

ruperts

With a £200 max monthly contribution into the H2B ISA, how are you calculating the £11,200 after two years?

JonB7

Ah, I accidentally calculated 3 years rather than 2. Thanks for pointing that out!

boomer69

I'm in need of a bit of advice please.
One of my kids has a HTB ISA I think with £3k in it (they started with the max, and pay in the max).
Is there any point opening a LISA, they have a 40% deposit on a £200k house.

george4064

boomer69 wrote: »

I'm in need of a bit of advice please.
One of my kids has a HTB ISA I think with £3k in it (they started with the max, and pay in the max).
Is there any point opening a LISA, they have a 40% deposit on a £200k house.

Depends on when your kid is going to buy because you cannot use the LISA bonus until it has been open for at least 1 year.

boomer69

george4064 wrote: »

Depends on when your kid is going to buy because you cannot use the LISA bonus until it has been open for at least 1 year.

Okay thanks.


They are ready to go now, but haven't found the right place. Time for a serious chat.


Thankyou.