Should I close my Help to Buy ISA? (LISA)

Ryth_cs

Hi,

I've been paying into a H2B ISA for the last few years and have accumulated roughly £6.4k. However, I have just opened a LISA with the intention of using the bonus to purchase my first home in about 5 years time. I believe that I can only utilise one of them when purchasing my first house. Given this, would it be advisable to close my H2B ISA and utilise the LISA given that the the H2B is capped? I will be crediting the full £4k each financial year into the LISA.

Cheers,
Ryan

masonic

What is the interest rate on the HTB ISA and can you beat it if you move the money to a different account? If not, it may be worth keeping as a savings account until such time as you buy.

DireEmblem

You can move the HTB to the LISA.

eskbanker

DireEmblem said:

You can move the HTB to the LISA.

....but only within the overall LISA contribution limit of £4K per tax year.

Ryth_cs

masonic said:

What is the interest rate on the HTB ISA and can you beat it if you move the money to a different account? If not, it may be worth keeping as a savings account until such time as you buy.

The gross interest rate is 1.25%. If I close it then I intend to start a stocks and shares ISA with the additional money as I can pay into both that and my LISA.

Ryth_cs

eskbanker said:

DireEmblem said:

You can move the HTB to the LISA.

....but only within the overall LISA contribution limit of £4K per tax year.

Yeah, having completed the £4k in my LISA, I'll have roughly £4k to play with, which I currently intend to invest into a stocks and shares ISA

masonic

A S&S ISA would have greater return prospects over the long term, but it would be worthwhile to retain some accessible cash savings for emergencies. I suppose in such circumstances money could be taken from the LISA (paying the penalty) if you have no other cash savings, but many would find that unpalatable. The other point is that you'll want to have some additional savings to spend on the costs of setting up a new home when you buy, so investing all of your non-LISA savings would seem unwise.