LISA and H2B, what to do?

Flatulentoldgoat

Kind of not sure how to proceed here. I'm 36, and just put 4000 into a new LISA. In the new tax year, I'll add another 4000 so I can get the maximum bonus. Meanwhile, I have a 1% H2B ISA that I've had for a few years that I have been topping up. It's accumulated £7600.

Meanwhile, I have a SIPP with around 18k in it and doing quite well.

I'm self employed and make contributions direct from my LTD company when I can afford to do so.

Can I be more efficient somehow ? I feel as if I should consolidate or liquidate the H2B as the bonus is a lot better and I think I'll use the LISA for my first house buy. However, I'd end up losing that nice LISA bonus which is a lot better than the H2B 1%.

george4064

Is the LISA a cash LISA or a stocks and shares LISA?

When do you plan to buy your first home? And for how much?

Flatulentoldgoat

george4064 said:

Is the LISA a cash LISA or a stocks and shares LISA?
When do you plan to buy your first home? And for how much?

Stocks and Shares LISA. I'd like to be in a position to buy within the next 6-12 months but I've been saying that for the past 3 years unfortunately!

eskbanker

Flatulentoldgoat said:

I feel as if I should consolidate or liquidate the H2B as the bonus is a lot better and I think I'll use the LISA for my first house buy. However, I'd end up losing that nice LISA bonus which is a lot better than the H2B 1%.

At least one of us is confused here!

If you liquidate the HTB and use the LISA for your property purchase then why would you lose the LISA bonus?  You'd lose the HTB bonus, but you can't have both, and so an integral part of the decision about which to use is which will give you the best return on your money.  Many in your shoes fund both a HTB and a LISA, using the former solely for the better interest, and the latter for the higher bonus-earning potential, although both products involve identical 25% bonuses....

Flatulentoldgoat

So would you keep the SaS LISA (and use it for the pension instead of the SIPPS) and use the H2B for the house purchase? I'm not sure if I can combine the SIPPS and SaS Lisa, that would be ideal I presume?

eskbanker

Flatulentoldgoat said:

So would you keep the SaS LISA (and use it for the pension instead of the SIPPS) and use the H2B for the house purchase? I'm not sure if I can combine the SIPPS and SaS Lisa, that would be ideal I presume?

I'm not sure that any of us can offer meaningful guidance without knowledge of more of the facts, but a starting point would be to take a stab at when you're likely to be buying your first property, how much it's likely to cost, and how much you feel you'll need to contribute, both in terms of deposit but also all the other costs involved.  You can then work out how much you're likely to be able to get into LISA and/or HTB - at some point you'll need to commit one way or the other but in the short term it seems borderline based on roughly equal values (circa £10K including bonuses, by April/May).

Flatulentoldgoat

How about this, am I obliged to use all of a LISA on a house purchase? If I could keep the last £1 in my LISA so I can continue to top it up (and get the £1000) that could be an option....

As for the H2B, it would then be redundant so presumably I can just gradually empty it onto my LISA?

eskbanker

Flatulentoldgoat said:

How about this, am I obliged to use all of a LISA on a house purchase? If I could keep the last £1 in my LISA so I can continue to top it up (and get the £1000) that could be an option....

You can withdraw what you like from the LISA, no obligation to empty and close it, although keep an eye out for any provider-specific terms about minimum balances.

Flatulentoldgoat said:

As for the H2B, it would then be redundant so presumably I can just gradually empty it onto my LISA?

Yes, you can shift its contents over to the LISA, but only up to £4K of contributions can be made to a LISA per tax year, regardless of whether they're new money or transfers from non-Lifetime ISAs.

Flatulentoldgoat

Thanks, I think I'll do that. I'll call it quits on the H2B and start emptying my allowances into it.

grumiofoundation

Flatulentoldgoat said:

george4064 said:

Is the LISA a cash LISA or a stocks and shares LISA?
When do you plan to buy your first home? And for how much?

Stocks and Shares LISA. I'd like to be in a position to buy within the next 6-12 months but I've been saying that for the past 3 years unfortunately!

If you are planning to but in 6-12 months then being in cash may be preferable? 

What will you do if your investments drop say 25%? Will this prevent you buying the property you would want?