No point in having a LISA short term if already have a max Help To Buy ISA?

skelly956

Can someone test my logic here:
I have a Help to Buy ISA that is virtually maxed out at close to £12,000 and I hope to buy a house in 1- 2 years time
If I put money into a LISA, I would need to wait 3 years for this to build to £12,000.
As I can only use the bonus from one of these to buy a house, if I buy one in 1-2 years time I should use the HTB as this would have the bigger bonus and I could possibly find some place better to put money once my HTB is maxed out than a LISA?
If however I don't buy a house for say 4 years, the best plan would be to freeze my HTB and put £4k a year into a LISA and accept I won't get a bonus from my HTB?

kuratowski

The basic logic makes sense - to me, at least!

skelly956 said:

If I put money into a LISA, I would need to wait 3 years for this to build to £12,000.

Not exactly true, as the 25% bonus is paid straight away (well, within a few weeks) for the LISA.  But essentially correct in the sense that it would take 3 years to have contributed £12k of your own money, based on the current rules.

A LISA may still be of long-term benefit, depending on the details of your pension arrangements; and, if you do want to use a LISA, it has to be opened before your 40th birthday.

eskbanker

The £12K currently in a HTB ISA could all be moved into a LISA in 14 months time from now (April 2021), and would allow use towards a property valued at up to £450K (outside London)....

grumiofoundation

kuratowski said:

The basic logic makes sense - to me, at least!

skelly956 said:

If I put money into a LISA, I would need to wait 3 years for this to build to £12,000.

Not exactly true, as the 25% bonus is paid straight away (well, within a few weeks) for the LISA.  But essentially correct in the sense that it would take 3 years to have contributed £12k of your own money, based on the current rules.

A LISA may still be of long-term benefit, depending on the details of your pension arrangements; and, if you do want to use a LISA, it has to be opened before your 40th birthday.

To clarify - will take 3 tax years NOT calendar (so as above 14 months). 

skelly956

ok - useful feedback. It looks like if I buy a house sometime after April 2021, LISA is in fact the way to go.