Lifetime ISA for first home, but complicated.

Saver_Han

Hi, this is my first post on this forum.

So I’m 21 and live with just my dad. I’ve been looking into opening a lifetime cash ISA over the past year as I’m starting to try save for my future. I have an active finance account on my car to try build my credit too. I don’t mind living at home and have no intention to move out soon as my dad is older and on his own, I don’t really have much desire to move out to then be on my own too as I’m on my own so it’s easier this way, as we can support each other financially too. However, I do have to face the fact that my dad won’t be around forever and take responsibility and steps for when I do need housing etc. and do need to become fully independent so I know my future is secure.

Basically, I am in my dad’s will to inherit the house alongside my brother. This has been our family home forever so does mean a lot to me, but I’m not sure whether it is a good idea to open a lifetime cash ISA and save just incase some circumstance happened such as my father needing residential care, his house would obviously be classed as an asset and taken off of him to pay for it. Obviously, he can’t gift the house to me for security to keep the house in the family as if he did end up in residential care I’m pretty sure they would see that as deliberate deprivation? Or I happened to decide to try get a mortgage before I inherit the house? 

Is opening a lifetime cash isa a good idea to save for a house just incase regardless of the possibility of me inherited a property and then not being able to use it without the 25% penalty fee? Could someone also direct me to which bank is the best to save my money in a lifetime ISA? Would appreciate any advice so much!

OldMoneySaver

It's quite unusual for a 21 year old not to have any intention of ever moving out of the family home unless forced to do so, but each to their own - in terms of anticipating your father needing care, how far into the future do you realistically think that could be, in terms of his age, health, etc?

Saver_Han

@OldMoneySaver I don’t intend to live in the family home forever. Of course, when I meet a partner I would love to move elsewhere too but I don’t see the rush at the moment since I don’t see the point of living alone. 

Since its just me and my dad, it’s easier and I’m happy to be at home with him whilst he’s here. I lost my mother a few years ago which really highlighted the importance of being with family whilst you have them, maybe that’s part of the reason too? I’m not sure. 

I don’t really ever predict he is going to need residential care as he is mobile and fit otherwise. He did have a health scare and a stay in hospital from a cancer he had removed around 2 years ago now but it didn’t affect his ability to be at home and go about his day to day. He also has regular health checks and scans. I’m just trying to prepare myself as much as possible for my future when situations change or when I do try get on the property ladder.

OldMoneySaver

I suppose the point I was making is that you can't keep your options open for ever and have to make some assumptions about your future, so if you'd anticipate buying a property in, say, five years, then that would make a cash LISA a much better option than if you were deferring this for, say, 25 years, or perhaps not buying at all if inheriting the family home (and continuing to live there) is a realistic prospect.

Anyway, you know the situation with regard to the LISA's 25% penalty if withdrawing other than for a first property (before 60), so up to you - the best ones are listed in the main MSE article at https: //www.moneysavingexpert.com/savings/lifetime-isas/ [remove space before double slash]

Albermarle

Probably a more likely scenario is that you will meet someone and move out, and your Dad continues to live there.
Then the family home will be sold when he dies.
He might go into a care home, but most people do not. Needing some lower cost care at home is more likely.
If he has any savings or investments, they will be used for care costs before the home.

Obviously, he can’t gift the house to me for security to keep the house in the family as if he did end up in residential care I’m pretty sure they would see that as deliberate deprivation
Correct.
 If he gifted you the house and paid a market rent to live there, it is more of a grey area ( I think) but these things can get messy and best avoided. 

Could someone also direct me to which bank is the best to save my money in a lifetime ISA?

As a general rule for all savings accounts, not just LISA's, avoid the well known big banks as their interest rates are normally poor. For a LISA this is easy as none of them offer LISA's !

IN this guide some companies offering cash ISA's  are mentioned. Lifetime ISA (LISA): how they work & best buys - Money Saving Expert

Saver_Han

@OldMoneySaver ahh okay. Thank you for this. Yes, I do expect to move out so would like a good place to build money for a mortgage when that time eventually comes. I don’t predict it will be 20+ years, but also can’t guarantee it will be around 5. I do see 5 years as a good prospect though, but with costs of living rising as everyone else is I do worry about affording a house on my own if I didn’t have someone with me. I’ll take a look at those anyways, thank you.

@Albermarle thank you I appreciate that. I know my dad mentioned it to me with regards to different avenues that could happen and it came about in a conversation as he had to review something with a solicitor. I’ve avoided the conversation of what if for years but I’m 21 and do understand that eventually I will need to be fully financially independent. So, hence the post, was looking for advice on taking steps to secure myself when the time does come to move out, or if I get the property and decided to withdraw funds to renovate etc. 

I’ve seen that Money Box does one but the interest is only there for a year? Then it decreased or something to 0.25%, whereas that BeeHive is at 0.8 constantly with interest paid annually? 

Albermarle

Not sure about Moneybox but Beehive is well know for offering LISA's. 
0.8% is not great compared to other savings rates , but it is a niche product, with only a few providers. Plus of course you get the 25% uplift . Hopefully the interest rate will increase at some point.