Lifetime vs Help to Buy

ailsad

Hi everyone,

I was hoping to get some advice regarding Lifetime vs Help to Buy. I currently have a Help to Buy which I've been paying into for some time, but my partner doesn't and was looking to open one before the deadline. He currently has a few thousand in savings which he wants to put towards a first time buy which could go into the Help to Buy.

I advised he should get a Lifetime instead as he could pay in more quickly (up to £4k a year) than the Help to Buy, but we've just read that you can't use the Lifetime for 12 months after you open it. We were hoping to buy within the next 18 months, but don't have an exact time frame. Due to this, we aren't sure whether to go with H2B or LISA.

One thought was to open both at this point, and if we buy within a year he could use the Help to Buy, or if not use the LISA. Whichever one he doesn't use, he could just transfer the money out (either H2B into Lifetime, or Lifetime into something else down the line). However, looking into this it seems like this shouldn't be an issue if taking money out the H2B (as you'd only lose the 25% bonus you'd get from the Lifetime anyway), but if you take money out the Lifetime you'd lose out due to the bonus being paid monthly (if you pay in £100 and get £25 bonus, you'd then pay back 25% of £125 which is £31 - is this correct?)

Any advice welcome - it seems to me opening both is a safe option if we end us using the lifetime, but risky if we end up opening a help to buy as we'd lose money from the lifetime unless it was left until he's 65. I'm not sure if I've got all the details around the Lifetime right though.

Also, I was wondering if anyone knew the definite rules around using a Lifetime and a H2B on the same mortgage but from two different people? I know two first time buyers together can use seperate H2Bs or Lifetimes, but can see nothing only if each buyer has different ones.

Thanks
Ailsa

eskbanker

ailsad wrote: »

if you take money out the Lifetime you'd lose out due to the bonus being paid monthly (if you pay in £100 and get £25 bonus, you'd then pay back 25% of £125 which is £31 - is this correct?)

Right figures but wrong reason - the LISA 25% withdrawal penalty isn't directly related to the bonus being paid monthly as such, but the fact that the bonus has already been paid mitigates the net loss down to 'only' 6.25% as you've said.

ailsad wrote: »

Also, I was wondering if anyone knew the definite rules around using a Lifetime and a H2B on the same mortgage but from two different people? I know two first time buyers together can use seperate H2Bs or Lifetimes, but can see nothing only if each buyer has different ones.

It's fine for one buyer to use a HTB and the other a LISA.


I suspect that the best thing to do for now would be for partner to open both but only fund the LISA with a token quid (to get the clock ticking), while feeding £1,200 into the HTB (and then £200/month). Once it gets to March you should hopefully have a better idea of buying timescales to support your decision about which horse to back before the end of the tax year, and if it's LISA then fill it up to £4K at that point....

ailsad

Thank you so much. That's a great idea as I think by March we'll definitely know better. I hadn't thought about just opening with token pound!