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Transferring HTB isa to LISA?

Hi all,

I have maxed out my HTB isa a few months back but with current conditions the interest rate on the account has dropped to 1.7%. I, wondering if the money will be served best elsewhere, for example a Lisa? 

I’m not going to be using the HTB scheme to buy a house most likely now so unsure what do to with this money. I won’t be investing this money in my portfolio as I want to keep this money  as safety cash, but wondered if I could do better than the 1.7% interest I’m currently getting.

Any thoughts welcome.

Comments

  • masonic
    masonic Posts: 25,555 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    edited 21 June 2020 pm30 8:19PM
    Clearly a Lifetime ISA is not suitable for money you wish to keep as "safety cash", as you'd pay a penalty to withdraw it - unless buying your first home or after you reach the age of 60. The penalty has recently been reduced so it only claws back the bonus paid within the LISA, but expect this to be a temporary measure. Interest rates on LISAs are not as high as 1.7%.
    A 1.7% rate on an instant access savings account is actually not bad in the current climate.
  • krish123
    krish123 Posts: 165 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker
    Good point, I thought there was a penalty for withdrawals. Am I right in saying the Lisa kind of works like a pension but with a gov bonus every year? 

    My HTB isa is with Halifax and I’m pretty sure when I last checked it was 1.7% , which your right isn’t too shabby in the current environment. I was just exploring if there were better options available.
  • masonic
    masonic Posts: 25,555 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    krish123 said:
    Good point, I thought there was a penalty for withdrawals. Am I right in saying the Lisa kind of works like a pension but with a gov bonus every year? 
    There is a one time government bonus of 25% on contributions, while pensions have tax relief of contributions leading to a 25% bonus for basic rate taxpayers, or 66% bonus for higher rate taxpayers. See the MSE guide: https://www.moneysavingexpert.com/savings/lifetime-isas/#pension-2

  • krish123
    krish123 Posts: 165 Forumite
    Eighth Anniversary 100 Posts Name Dropper Combo Breaker

    Thanks Masonic, i did read that guide shortly after posting last night. i dont think a LISA is for me seen as i have built a portfolio in S&S ISA over the last 6 years, which gives me flexibility to withdraw the money whenever i like.

    In fact you were one of the people that helped me in the early days! i read my threads when i was starting out and gosh you guys were patient haha. Is bowlhead still a poster here?

    I think for now i will leave the money in the HTB ISA and unless any great opportunities come up il leave it there for now.

  • krish123 said:
    Hi all,

    I have maxed out my HTB isa a few months back 
    Just an FYI you can keep going beyond the £12,000 in case you didn't know (I didn't know until I looked into it). You won't get a gov't bonus beyond the initial £12k but you'll still get the interest. 
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