HTB and/or Lifetime ISA 22 August 2019 at 5:20PM edited 30 November -1 at 1:00AM in ISAs & Tax-free Savings 6 replies 767 views

theshed

My daughter, 22, had a Help to Buy ISA but was told by her lender, Halifax, that there was no point in using it as it had not been open long enough.
Is she still able to open a Lifetime ISA ?
Thanks

eskbanker

No idea what Halifax are talking about! It's true that there needs to be £1600 in the account before it qualifies for a 25% bonus towards a first-time property purchase, so perhaps if it's only been lightly funded then that might be what they're referring to, but there's no time limit as such, other than the end of the scheme in ten years time.

Anyway, the short answer is yes, she can open a LISA as well as a HTB, and it might even be the best thing for her to do, but make sure that she does it for the right reason, rather than based on some made-up nonsense from Halifax....

theshed

Ok, thanks for reply. I will try and find how much she had in at the time.
I assume as she will no longer be a first time buyer then the Help to Buy ISA is of no use.

masonic

When does her property purchase complete?

Alexland

Also remember that a LISA has a 12 month rule before it can be used for a penalty free withdrawal towards a qualifying property purchase. If she purchases a property (eg using the LISA) then she will no longer qualify to hold a HTB ISA account.

Rich2808

A help to buy isa bonus can be drawn down sooner – within as little as three months (i.e. a £1,600 balance for a £400 bonus). But the lifetime isa bonus is potentially more generous over time – but you can have to wait for up to a year qualify.
Another key factor is house prices in the area your daughter wants to buy – the property limit is £450,000 everywhere for the lifetime isa but only £250,000 for the help to buy isa (£450k if you live in one of the 33 London boroughs).
In the south east for example the help to buy isa is almost useless as its hard to get a decent property below £250,000. And bear in mind for shared ownership properties it’s the total price not the share you are buying (e.g. if you buy 25% of a £500k flat you cannot use either product even if you are only paying £125,000).

That for me is the key issue – is your daughter going to buy a property costing below £250k.

Assuming as is implied the purchase is too far gone she can of course keep her lifetime isa and get a bonus of up to £1k per annum until she is 50. But she can’t withdraw this penalty free before age 60 as that can only be done for a first time house purchase.
And don’t forget these aren’t first time buyer but first time owner schemes – if you inherit a share of a property you are unlikely to be eligible even if you have never bought a home.

Alexland

Rich2808 wrote: »

And don’t forget these aren’t first time buyer but first time owner schemes – if you inherit a share of a property you are unlikely to be eligible even if you have never bought a home.

If you only inherit a share of a property, rather than the whole property, then it seems more likely that it will be sold within the estate and you will only receive cash proceeds in which case you are still a first time buyer.

Alex