H2B or LISA when i have Cash ISA i dont want to merge

chris112

I am going to open either a help to buy ISA or a lifetime ISA. But as I already have a cash ISA I am told that unless I have both products under one bank (Nationwide said they cold), that I won't be able to have them with different banks

as i annually switch my current account, would i be able to switch both at the same time?
also as my bank pays 0.5% on an instant access cash isa nd im currently getting 1.42% with shabrook, i dont want a low rate from a retail bank

- would i still get the 2.5% rate if i put my 15k cash isa savings in a H2B or LISA?

also, as im only opening the H2B OR LISA in the unlikely event of me buying, due to my circumstances, would i still get the 2.5% rate if i closed the ISA say in a few years?
I understand you dont get the 25% bonus until you finalise the house buy/pay the deposit

- i would need to put money in and out of the ISA but would always pay the monthly amount in and would only remove part of my 15k savings
thank you

masonic

You can't pay into a HTB ISA in the same tax year you pay into another cash ISA unless it is with a single split-ISA provider. You can pay into a LISA and a cash ISA as they are different types of ISA. There is nothing to stop you having all three, subject to the cash + HTB being a split-ISA.

Interest rates differ between products and currently no LISA pays 2.5%. Using a HTB ISA as a savings account is perfectly fine as long as you are eligible to hold it (haven't owned property). A LISA can only be used towards a home or retirement - otherwise you'll have a 25% penalty for withdrawals.

chris112

I see, thanks for explaining,

if i understand correct, i can put my 15k in the HTB ISA and still remove 50% (for rent) / then pay back in , in monthly installments
and still benefit from the 2.5% tax free interest (and the 25% bonus if/when i buy a property?
if so this would bring much better monthly interest than my 1.42% cash isa, sso i wouldnt need a cash isa as well
so if there are unlimited withdrawals, couldnt i just treat the HTB ISA as if it was my cash iSA?

i do qualify for both the HTB and LISA
But as you said there is a penalty for withdrawals with the LISA , i think my best option would be the HTB ISA, based on my usage ^

eskbanker

chris112 wrote: »

if i understand correct, i can put my 15k in the HTB ISA

The good news is that you can put £15K into a HTB ISA.

The bad news is that it'll take you nearly six years to do so - you can pay in up to £1,000 as a one-off initial subscription and then no more than £200 per month thereafter, even if transferring from other ISAs.

LISA allows higher annual contributions, of up to £4K, so that would 'only' take four tax years to shift your £15K, although as above it's not suited for paying in and withdrawing again, except for a property purchase (or waiting until after 60)....

Read up on the details of each scheme at:
https://www.moneysavingexpert.com/savings/lifetime-isas/
https://www.moneysavingexpert.com/savings/help-to-buy-ISA/