LISA or buy abroad? Help!

gclamb

I’d really like opinions on my situation.
2 years ago I came to live in NZ. I no longer pay into my LISA as I can’t but I have about £20,000 in there (that’s with the 25% included). The thing is, I’m renting over here and it’s really absorbing a lot of my money (plus the rentals are poor quality). I am not going to be back in the UK for a few years and I’m debating just buying in NZ and forgoing the LISA. That’ll mean I’ve put money in that LISA that hasn’t gained a lot of interest once I remove the 25%. I could use it for a pension pot though.

What do people think?

Alexland

Although rent is money gone buying a property is a long term investment as in the early years any price reductions could mean you could be selling at a loss which might wipeout your deposit or even worse find yourself in negative equity and stuck with it until prices recover. How long is 'a few years'?

masonic

I can't see why you'd want to compromise your quality of life and current finances for the sake of possibly being able to use the LISA towards a property in the UK in the future. When you return to the UK, you'd be able to transfer to a S&S LISA for retirement (providing a provider willing to accept transfers still exists).

badger09

gclamb said:

I’d really like opinions on my situation.
2 years ago I came to live in NZ. I no longer pay into my LISA as I can’t but I have about £20,000 in there (that’s with the 25% included). The thing is, I’m renting over here and it’s really absorbing a lot of my money (plus the rentals are poor quality). I am not going to be back in the UK for a few years and I’m debating just buying in NZ and forgoing the LISA. That’ll mean I’ve put money in that LISA that hasn’t gained a lot of interest once I remove the 25%. I could use it for a pension pot though.

What do people think?

How have you managed to deposit £16k into your LISA if you've been living in New Zealand for 2 years?

eskbanker

badger09 said:

How have you managed to deposit £16k into your LISA if you've been living in New Zealand for 2 years?

That thought briefly crossed my mind too, but they could have had an earlier Help To Buy ISA and transferred it in during the first year of the LISA scheme (2017/18), although it would still be difficult to have achieved £20K by the end of 2018/19 that way too....

Or perhaps OP uses "I" when meaning "we" and it's actually two LISAs for a couple?

Or maybe impressive growth in a S&S LISA? They do refer to "I’ve put money in that LISA that hasn’t gained a lot of interest once I remove the 25%" which obviously suggests a cash LISA but equally a non-qualifying withdrawal from a cash LISA would actually lose money rather than 'not gaining a lot'....

gclamb

Thanks for your replies everyone. I am talking about 2 LISAs – 8k deposited in each in the 2 years before I came to NZ. Don’t worry, no dodgy dealings. And I’m talking about them together because I plan to combine with my partner if we use our LISAs to buy a property.

gclamb

masonic said:

I can't see why you'd want to compromise your quality of life and current finances for the sake of possibly being able to use the LISA towards a property in the UK in the future. When you return to the UK, you'd be able to transfer to a S&S LISA for retirement (providing a provider willing to accept transfers still exists).

Thanks for your reply. I guess because I plan to move home in 5 years or so, at least for a while, because I would like to be near family as parents get older etc. That’s why I am compromising my quality of living right now.

gclamb

Alexland said:

Although rent is money gone buying a property is a long term investment as in the early years any price reductions could mean you could be selling at a loss which might wipeout your deposit or even worse find yourself in negative equity and stuck with it until prices recover. How long is 'a few years'?

Thanks for your reply. Yes, especially as the Wellington house market is particularly !!!!!! at the moment. House prices rising dramatically but now because of COVID, things are going to be unstable. To be honest I’ll probably go home within the next 5 years and return at some point in the future (I’m 27 now) to live again, potentially when I have children.

masonic

gclamb said:

masonic said:

I can't see why you'd want to compromise your quality of life and current finances for the sake of possibly being able to use the LISA towards a property in the UK in the future. When you return to the UK, you'd be able to transfer to a S&S LISA for retirement (providing a provider willing to accept transfers still exists).

Thanks for your reply. I guess because I plan to move home in 5 years or so, at least for a while, because I would like to be near family as parents get older etc. That’s why I am compromising my quality of living right now.

If you're willing to go on living in poor quality accommodation for the next few years, and would prefer to pay high rental costs than risk property prices falling over 5 years, then that makes your decision easy. I don't imagine the impact of Covid on property prices will take long to come to bear, and it is likely to be a temporary dip, so there could be good buying opportunities ahead, though not right now. But 5 years would be a minimum period to be buying property for if you want to minimise the risk of having to sell for a loss.

Your LISA is going to sit there and lose a little value due to inflation over the next 5 years whatever you do. If you can use it towards retirement then there is little difference for you financially whether you are able to use it towards a property purchase or not, presuming you have enough savings for a deposit on a house, which must be the case if you are considering buying in NZ and using the LISA as a pension pot.