Advice regarding Help To Buy and LIfetime ISA

BiTTerMinT

Hi all! I'm new here so apologies if I'm making obvious mistakes.

I have a Help To Buy ISA, into which I save the maximum £200 each month. It currently has an interest rate of 2%. I've only recently discovered the benefits of a Lifetime ISA, namely being able to save more per year and thus earn a bigger bonus. As I can afford to do so, I'm tempted to open a LISA now and use that instead of the Help To Buy. The only issue is the interest rate on the LISA (I'm looking to open with Nottingham BS) is 1%, half that of my Help To Buy.

I'm considering opening the LISA with a £10 minimum deposit (starting the 12 month countdown) whilst continuing to save into the Help To Buy to take advange of the interest rate. I'd then look to transfer £3,990 from the Help To Buy, into my Current account (Nottingham doesn't allow transfers in from ISAs) and then over to the LISA just before 5th April to take advantage of the 20/21 bonus. I'd then repeat the process the following year. Is this a good idea? Are there issues with transferring the money from Help To Buy, to my Current account and then over to the LISA? Any advice would be much appreciated. Thanks.

grumiofoundation

You can do HTB -> current account -> LISA (word of warning based on threads posted last April don't leave it till 5th April, will likely be too late for 2020/2021 tax year).

Only potential issues are you won't be able to pay into another cash ISA (unless with same provider via split ISA) and you will 'use up' £2400 of ISA allowance. 

Only real drawback of LISA vs HTB ISA is the accessibility of money - can you afford to lock the money into LISA (normally is a withdrawal penalty mean get back less than paid in, this penalty is currently reduced to 20%, so just lose bonus)

BiTTerMinT

I'd considered the withdrawal penalty, but in reality it's not a concern because all of those savings are for my first property purchase and won't be for anything else. The ISA allowance isn't an issue as my other savings will be split between savings and bonds accounts with NS&I, so between the HTB and LISA I won't get near the £20k limit. 

Thank you for the advice. Seems my plan is good to go then!