LISA VS Help to Buy ISA

ZOZO93

Hi all,

Apologies if the below is a silly question I am still new around here .

Essentially we are in a situation where I have a mortgage in my name and my partner has never purchased a property before. We are due to be married next year.

 Currently I am the sole contributor to the mortgage and we will be looking to move to a bigger house in the next 18-24 months. When we move we will be looking at both contributing to the mortgage and are therefore trying to identify the best way of building up my partner's savings.

 Up to now they have a Help to Buy ISA which effectively has a balance of zero (it was opened with a tenner just in case it was needed!). We both thought that if we were buying a property together then the help to buy isa scheme could not be used but from reading the MSE guide that is not the case.

So my question is would my partner be best contributing the maximum £200 a month to the Help to Buy ISA or would he be better opening a LISA and putting in the maximum of £4k with the aim of using this towards a house deposit saving.

In terms of the value of the house we'd be looking to buy it would likely be in the region of £200-£300k and we'd be aiming for 100k ish in a deposit.

grumiofoundation

You cannot use the HTB ISA bonus towards a property with more than 250k outside London. So if that is the case then LISA is your only option. 

In any event assuming you are able to contribute 4k a year to LISA if is a better options anyway - as it will get you (well your partner!) more bonus. 

By April 2022 they can have contributed 8k (so 2k bonus) whereas HTB isa would be limited to 200 per month. 

The drawback to lifetime ISA is the withdraw penalty so is only suitable for money you would definitely use for deposit (or would be happy to lock away until retirement - in which case a stocks and shares LISA would be more suitable). 

But -

One issue I spot from your post is you say you are due to get married next year (don’t worry this is not an anti-marriage rant!!! Congratulations!!!) but this could impact on  your partner’s (then spouse) first time buyer status??! I am no expert but probably something worth checking?