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Lifetime ISA - Penalty on withdrawing remaining funds after house purchase?
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sally_wightman
Posts: 1 Newbie
I'm looking into getting a LISA as I'm planning on buying a house in a few years time. My concern is if you can only use the money saved in a LISA for the deposit, what happens if you have money remaining in the account after you have paid your deposit? Do you have to pay the withdrawal penalty to take the remaining funds out? Therefore, is it wise to stop putting money in when you reach a certain amount?
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sally_wightman said:I'm looking into getting a LISA as I'm planning on buying a house in a few years time. My concern is if you can only use the money saved in a LISA for the deposit, what happens if you have money remaining in the account after you have paid your deposit? Do you have to pay the withdrawal penalty to take the remaining funds out? Therefore, is it wise to stop putting money in when you reach a certain amount?
The money in lifetime ISA can only be withdrawn penalty free for house purchase (assuming fits criteria) or for retirement (can withdraw at 60 with no penalty). Any money you do not use for deposit you can either leave in for retirement (in this case is probably better to transfer to a Stocks and Shares LISA) or withdraw and pay withdrawal penalty. Normally this penalty is 25% meaning you would get back less than paid in (currently 20% until April due to Covid).
https://www.moneysavingexpert.com/savings/lifetime-isas/
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