Help to Buy ISA / LISA query (opening a LISA when already maxed out the help to buy ?)

Mick70

quick query please if anyone can help
daughter age 21 has a help to buy isa and this now has the maximum govt bonus of £3k
she has said she intends on trying to get her first home in 5 years time and is wondering whether to open a LISA  over this 5 year period and pay in 4k pa in order to get the govt bonus of £1k pa  (so possible 5k bonus over 5 years) .  I have said unsure if can do this (think you can) and if it is a wise move anyway as you would lose the 3k bonus in the help to buy and if there are better options out there for her ?
If anybody more knowlegeable than me has some advice it is much appreciated

thanks
mick

eskbanker

Yes, she can open a LISA, which will indeed surpass the bonus-earning potential from the HTB if held for more than three tax years. If she'd made the switch earlier it would have been better but even starting now it'll work out better with LISA if she's definitely not buying for five years.

md258

I'd say start using a LISA as well. If she doesn't have enough to hit the £4k each year then she can take some out of the HTB ISA to fill up the LISA.  If the interest rate on the HTB ISA is good, she can keep it open (but she can't use the bonus from it).

The only reasons i can see not to switch over are:
She changes her mind and wants to buy before April 2023
The house that she wants to buy will cost > £450k in 5 years time
She changes plan and doesn't want to buy at all in 5 years time