LISA Questions - Timings around buying a house and turning 40

Crasher

Hi all!  Not sure if I'm over thinking this, but I'm trying to work out the best timings for opening and contributing to LISAs.

My situation is this:  I have a LISA from last year, which I have not contributed to since March as I thought it would be prudent to have a bit of extra cash handy during these unusual times.  My partner and I are also looking to buy a house in the near future (hopefully within 6 months - we have the deposit ready to go and our mortgage broker thinks we'll be able to get something suitable), and I am also creeping up on 40.  I would like to use the current cash in my LISA for a house, and also have one open that I can contribute to until I'm 50.  Would it make more sense to continue contributing to the one I already have if I'm able, or to open a fresh one?  If I use it to buy a house will they have to close it down / use all the cash in it?  Or can I just keep it open and start tucking money aside for retirement?

Thanks!!

eskbanker

There's no obligation to close down a LISA when withdrawing money for a property purchase, so you can leave a token quid (or any other amount) in there to keep it open if you wish.

Having said that, it would be more typical to use a cash LISA for a property deposit but then a S&S LISA for longer term money, because inflation would erode the real-terms value of cash over that lengthy period.  However, transferring from cash to S&S isn't as easy as it should be, due to some providers not accepting transfers, and others not doing so for over 40s, so it might be worth getting on with opening an S&S one now (before you're 40) if you're not going to pay into the cash one before your property purchase?

Crasher

Hi Eskbanker - thanks so much, this is incredibly useful.  When I was looking into it a while ago I did read that S&S LISA might be a good idea, but then other people were recommending retirement (SIPP?) funds instead and I kind of just gave up as I was still saving for a house at that point.
Do you have any S&S LISAs that you'd recommend?  I have a S&S ISA that I contribute to - Vanguard - and like that I could just pick my risk profile and set it up without needing to research all the individual stock as I'm a beginner at these sorts of things.
Also, should a LISA still be getting the bonus if you haven't contributed to it in that year?

eskbanker

Crasher said:

Do you have any S&S LISAs that you'd recommend?  I have a S&S ISA that I contribute to - Vanguard - and like that I could just pick my risk profile and set it up without needing to research all the individual stock as I'm a beginner at these sorts of things.

https://www.moneysavingexpert.com/savings/lifetime-isas/#bestbuysstocks summarises some of the key players - if you already have a Vanguard S&S ISA then chances are you should be capable of running a S&S LISA with one of the full-function providers such as A J Bell or HL, but there are the simplified higher-cost lower-choice options from the likes of Nutmeg and Moneybox if you prefer.

Crasher said:

Also, should a LISA still be getting the bonus if you haven't contributed to it in that year?

No, LISA bonuses are associated with contributions, so are only made on a one-off basis when you pay anything in.

Crasher

Thanks so so much!