Shafted - Lifetime ISA

omari

Hello,
Just as I'm due to complete on a flat purchase, along comes a virus and wipes 25% off of the value of my lifetime ISA, taking a large chunk of my deposit with it. 
I realise there is absolutely !!!!!! all I can do about it, but wanted to hear from others in a similar situation; for solidarity's sake more than anything else. Is there anything else to be done? I asked my mortgage broker whether the bank could lend a bit more for the mortgage given the extraordinary circumstances, but the answer was a resounding no. 
PS: yes, I realise that there are far worse situations to be in. 

Someone2088

I am in a similar situation: literally just had an offer accepted on a house, with a reasonable amount of my deposit in a Lifetime ISA, and the value very much having been on an upward trend since opening it when they first became available. I had been depositing the maximum amount every year, in order to receive the maximum amount of bonus from the government (up to £1,000 bonus per financial year). I checked its value over the weekend, and it had basically lost the full amount of bonus paid during the time it's been open. It's probably lost even more since then...

I am expecting to complete on the house within the next few weeks... My thoughts at the moment are that I might hold off on the Lifetime ISA (i.e. not put that sum toward the deposit) if I can manage to get the same figure together from cash savings- though this would leave me with a much smaller than intended emergency fund...

My other thought was to possibly try to negotiate with the sellers to drop the price to £250,000, so that I can claim the 25% government bonus on the Help-To-Buy ISA, which I've also been paying into, and I will pay them the rest of the agreed price for the 'fixtures and furnishings' included with the property. Though I have no idea whether they will agree to this...

A_Lert

Sounds like in such a situation, the least costly option might be to cancel the purchase.

It's a warning, unfortunately too late for the people here: Any savings you plan to use for the deposit should be moved into cash, not left in stocks and shares.

princeofpounds

Sorry to hear it. There isn't much you can do, but perhaps viewing it in the perspective of the whole property will help emotionally a little; it may be 25% of your deposit, but it's only 2.5% (or whatever) of the property value. Given you are probably a net borrower rather than saver, and will be for many years, you're probably better off on a net basis actually, with lower mortgage rates (probably, next time you remortgage anyway), despite lower securities values. 

omari

A_Lert - easy to say in hindsight, plus a Cash ISA would offer zero growth. Like Someone2008 my LISA had performed pretty bloody well over the past two years and I'd deposited the maximum 4k a year in both years.
Just too good to be true, I guess. 

Someone2088

I was fully aware of, understood, and accepted the risks of having any money at all in the markets when opening the LISA- the reasons I decided to as soon as they became available, was because of the 25% government bonus that would be added to the value when putting it toward a property purchase.

As of the weekend, the value wiped out by the stock market drop was pretty much the entire government bonus- so at that point, I was no worse off than having it as cash (I wouldn't have been getting any interest on it, as I had already maxed out all of the interest paying accounts I could find). Granted, it's probably even less now- which is why my thinking is to try and find the cash value of what it was prior to the crash elsewhere (use more cash than I had intended- meaning a smaller emergency fund), and leave the LISA for retirement...

NewShadow

I know this isn't going to be of any help for you OP - but might be worth saying explicitly for anyone coming to this thread who's currently saving in a LISA for a future purchase...

You can save during your accumulation phase into a S&S LISA, then - when you're in a position to start looking at properties seriously/have hit your target deposit figure - you can transfer your LISA to a Cash LISA provider to protect any gains you've made in the period.  Note: It takes upto a month for them to process the transfer - in the same way as it can take upto another month for your solicitor to draw down the funds in preparation for exchange. 

If you do this 6-12 months before your intended purchase date, yes, you've lost any possible market growth in that period - but you've also mitigated the risks associated with short term investments so you can offer/exchange on a property with a reasonable certainty you'll have the funds available to complete. 

theartfullodger

Different sorts of investments go up and down: Happens all the time:  Always did.  Always will.  To be expected frankly.  There is no 100% safe investment, not even £££'s under the bed.

I'm not even bothering to look at the value of some of my assets currently, and some £10k+ down on one dodgy organization.

A fundamental flaw of capitalism. Hope things improve - for everyone.  One's health is surely rather more important than mere ££££ losses.

Artful: 72: Had a good life, if the worst happens, can't really complain.  Best wishes everyone!

AnotherJoe

you can transfer your LISA to a Cash LISA provider to protect any gains you've made in the period.

Or you could just sell them first and then xfer making the 30 days irrelevant. 

NewShadow

AnotherJoe said:

you can transfer your LISA to a Cash LISA provider to protect any gains you've made in the period.

Or you could just sell them first and then xfer making the 30 days irrelevant. 

I sold mine then transferred as it's easiest to transfer cash - at the time the interest rate on cash in my A J Bell S&S account was something like .25% compared to the *waves hands* something like 1.25% offered by the Newcastle Cash LISA - it's not a huge amount, but better than nothing given I didn't know how long it would take me to find a house I liked enough to offer on... 

Thrugelmir

omari said:

A_Lert - easy to say in hindsight, plus a Cash ISA would offer zero growth. Like Someone2008 my LISA had performed pretty bloody well over the past two years and I'd deposited the maximum 4k a year in both years.
Just too good to be true, I guess. 

No consolation I appreciate. Chalk it up to experience. That's why you'll constantly see people harping on about investing being for the longer term. Immediate requirements should be held in cash or equivalents. 
Have you actually made a loss or just lost a lot of the gain? There's a difference.