Lifetime ISA - Buying home with partner over £450,000

Helen_Tom

Hello,

I have been saving into a Skipton Lifetime ISA for several years to buy my first home.

I am now in a relationship and have moved in with my partner, who is an existing homeowner. When we buy our next home together, it is likely the value will be over the FTB LISA limit of £450,000 as we live in the south-east. My partner does not have a LISA and would be using equity from the current property to buy the next property. We are looking to buy a property in the region of £550,000 to £600,000.

My question is as follows: if we were to buy a house together that costs more than £450,000, will I be able to withdraw my LISA savings in full to put towards the purchase of the property, or would I incur a penalty even though I am still a FTB and my contribution to the overall cost of the property will be lower than £450,000?

Thanks in advance.

Helen

grumiofoundation

Yes you will have to pay the penalty. It is the property price that is the limit. 

Albermarle

You might want to consider leaving the LISA alone ( so no penalty ), and taking it later when you are retired/older.

LISA has two potential uses. As a way of saving for a first time property purchase, or as an alternative/addition to a pension .
When you save into a LISA you do not have to define which of the two you will use it for .
However if you do decide to keep it for much later , best to switch from a cash Lisa to a Stocks and shares Lisa .

Helen_Tom

Thanks both for your advice. I think I will speak to Skipton about what my options are with the LISA. We aren't ready to move just yet anyway, so maybe the maximum property value will have been raised by then!

eskbanker

Helen_Tom said:

I think I will speak to Skipton about what my options are with the LISA.

Skipton won't be able to conjure any options beyond those already mentioned, i.e.

1. Withdraw penalty-free towards a first-time property valued at no more than £450K
2. Leave the money in the LISA (or another into which you transfer) until you're 60
3. Withdraw with a 25% penalty under any other circumstances

Helen_Tom said:

We aren't ready to move just yet anyway, so maybe the maximum property value will have been raised by then!

No sign of any such value adjustment thus far, in the five years since the scheme was introduced, so, in the context of other thresholds (personal tax allowance, pension lifetime allowance, etc) being frozen for multiple years, it would seem optimistic to bank on that, i.e. you'd need to consider carefully if it's going to be worth continuing to fund an account that would ultimately lose you money if conditions didn't change and you had to withdraw under penalty.  Even if the value cap was to be increased in future, chances are that this would be in response to continuing property price inflation, so if you're already anticipating being well over the limit by 20-30%, then it would be brave to rely on suddenly being brought under it....