Have a Lifetime ISA or used one towards your first home? We want to hear about your experiences

singhini

When the LISA scheme was launched i thought it was a good idea (25% uplift is definitely worth having). 

In fairness to the government the LISA was not solely about houses/housing, they did say "You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. 

i thought the government were very clear with their explanation and examples Lifetime ISA - GOV.UK (www.gov.uk)

I'm struggling to see what the national issue is for a national camping: Someone is aged between 18-40 years old, putting money into a LISA and receiving potentially upto £1,000 PA and then they can potentially use the money to buy property upto £450,000 or less  (the £450,000 seems fair to me). If you don't buy a property you can take the money penalty free when your 60 (either by cashing it in or transferring it to another ISA (which still keeps the money within a tax free wrapper). 

Seems  fair   good.

Have i miss understood something?   (if there's a call for a campaign i must have)

Gladyshen

I bought my first home last September following years of looking, partially driven by not quite knowing where to put down roots.  I've had a LISA since they became available and have around £25k in it.  My now home was on the market in early 2021 for under the LISA threshold, sold (without us even getting a sniff at a viewing) fell through and the reappeared on the market last spring for significantly over the threshold.  We loved it enough to push the budget (and increase work hours) to just about afford it.  This all happened,  of course, after the stamp duty holiday ended (though we are in Wales so this wasn't very generous anyway) and after the temporary reduction in loss of LISA funds for withdrawing for another reason reverted.  Wales also doesn't have any stamp duty reduction for FTB as is the case in England so we have really had a triple whammy.
Yes, I am 'lucky' to be able to afford my house, but I studied for years, work hard and have saved my entire working life (I'm 42) to put together a good deposit.  Not being able to use my LISA has added more pressure and now I face losing some of my hard-earned unless I manage to not need it for bills/maintenance/life before I turn 60 (unless they change the rules on that too!).  I hate to think how many night shifts it took to earn the money I'd lose!

Losing the bonus but letting people keep their own money is the very least they could do, though this still represents a loss if you take inflation into account.

Interesting that if you don't need the full amount for your deposit that you can use the remainder for other things as stated in another post!

silvercar

singhini said:

When the LISA scheme was launched i thought it was a good idea (25% uplift is definitely worth having). 

In fairness to the government the LISA was not solely about houses/housing, they did say "You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. 

i thought the government were very clear with their explanation and examples Lifetime ISA - GOV.UK (www.gov.uk)

I'm struggling to see what the national issue is for a national camping: Someone is aged between 18-40 years old, putting money into a LISA and receiving potentially upto £1,000 PA and then they can potentially use the money to buy property upto £450,000 or less  (the £450,000 seems fair to me). If you don't buy a property you can take the money penalty free when your 60 (either by cashing it in or transferring it to another ISA (which still keeps the money within a tax free wrapper). 

Seems  fair   good.

Have i miss understood something?   (if there's a call for a campaign i must have)

The problem is for people who have saved their deposit money into an ISA and then are not eligible to use it on a home purchase. It is unfair that they can't get the money they have put in back out without a large penalty. They need the money for their deposit, they don't want to save it for later life. Yet they have to lose a portion of their hard earned cash to do so.

Ideally the £450k limit in London needs lifting, but failing that it should be possible to withdraw your money without penalty if you are using it for a deposit on a home purchase that isn't eligible. There is also the case where people are no longer considered first time buyers through no action of their own eg they have inherited part of a home.

singhini

silvercar said:

singhini said:

When the LISA scheme was launched i thought it was a good idea (25% uplift is definitely worth having). 

In fairness to the government the LISA was not solely about houses/housing, they did say "You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. 

i thought the government were very clear with their explanation and examples Lifetime ISA - GOV.UK (www.gov.uk)

I'm struggling to see what the national issue is for a national camping: Someone is aged between 18-40 years old, putting money into a LISA and receiving potentially upto £1,000 PA and then they can potentially use the money to buy property upto £450,000 or less  (the £450,000 seems fair to me). If you don't buy a property you can take the money penalty free when your 60 (either by cashing it in or transferring it to another ISA (which still keeps the money within a tax free wrapper). 

Seems  fair   good.

Have i miss understood something?   (if there's a call for a campaign i must have)

The problem is for people who have saved their deposit money into an ISA and then are not eligible to use it on a home purchase. It is unfair that they can't get the money they have put in back out without a large penalty. They need the money for their deposit, they don't want to save it for later life. Yet they have to lose a portion of their hard earned cash to do so.

Ideally the £450k limit in London needs lifting, but failing that it should be possible to withdraw your money without penalty if you are using it for a deposit on a home purchase that isn't eligible. There is also the case where people are no longer considered first time buyers through no action of their own eg they have inherited part of a home.

Thanks for the explanation i honestly do appreciate it but I'm still struggling with the details I'm afraid.

When you say "not eligible to use it on a home purchase". you mean on a purchase greater than £450,000   (if the purchase was less than £450,000 then it would be OK).

Also is 6% a large penalty?   (sounds like the government are getting back their 25% bonus money aswell as 6% interest for the tax payer.   Wasn't PPI interest 8%).

Your last point regarding circumstances someone is no longer considered a first time buyer is interesting. IMHO they should still be regarded a first time buyer since they didn't purchase a property, it was inherited.

there just my thoughts  (i will bow out of this conversation now and i wish you all a good nights sleep).

joao.matos

Some people in this forum seem to lack empathy which is sad. 
The product LISA/HTB is no longer fit for purpose, so they should just stop it instead of pretending they are helping people if they are not.
People have been throwing cash at this product , specially the HTB, and then cannot use it. It was a waste of time and money - lots of money for some people. Those HTB ISA are very limited in the amount you can get in and the rates it gives you.
So you squeeze whatever money you can get, and  soon you realise all your efforts were in vein... you cannot buy a house because prices are through the roof and the deposit you had , assuming the bonus, no longer applies.
yeah you can still use the LISA for retirement but that was not the use case.
If you buy a knife that promises to cut your bread and you butter but after 2 days no longer cuts bread only butter you go back to the seller and don't hope they say " but it still cuts butter"... SAD FART! If it's not fit for purpose should not be advertised as such. 
They want people to get on the housing ladder so they 'remove' the stamp duty so why not increase this ceiling?

singhini

joao.matos said:

Some people in this forum seem to lack empathy which is sad. 
The product LISA/HTB is no longer fit for purpose, so they should just stop it instead of pretending they are helping people if they are not.
People have been throwing cash at this product , specially the HTB, and then cannot use it. It was a waste of time and money - lots of money for some people. Those HTB ISA are very limited in the amount you can get in and the rates it gives you.
So you squeeze whatever money you can get, and  soon you realise all your efforts were in vein... you cannot buy a house because prices are through the roof and the deposit you had , assuming the bonus, no longer applies.
yeah you can still use the LISA for retirement but that was not the use case.
If you buy a knife that promises to cut your bread and you butter but after 2 days no longer cuts bread only butter you go back to the seller and don't hope they say " but it still cuts butter"... SAD FART! If it's not fit for purpose should not be advertised as such. 
They want people to get on the housing ladder so they 'remove' the stamp duty so why not increase this ceiling?

Some people in this forum seem to lack empathy which is sad. 
Yeah tell me about it (no one cared i lost my job and have now gone to just £600 a month wages from previously being paid £6,000 after tax)...... i got a complete lack of empathy! i thought i had done well for myself as a working class boy but the other working class folk on here soon dragged me back into place; (i didn't need the rich telling me where i belong)!! Shame really, as i had been contributing £25,000 a year in income tax & NI each year and doing my bit for the nation...... but they didn't want to acknowledge that!!!
You've only posted 7 times, you just need to spend a little more time on here and you will soon get used to it (don't show too much empathy...... you might get quizzed on such things like your thoughts about migrant crossings).

Anyhow, your knife & butter analogy is a false equivalence to the LISA scheme (there are no similarities). We could say the NHS is not fit for purpose, but that would also be a completely separate issue to a LISA. 

so why not increase this ceiling? 
You could increase the ceiling........ but wouldn't it be better to reduce the fine to a rate of 20% (increasing the ceiling will benefit a few in areas like London whereas reducing the fine would help alot more people around the country).


its my bedtime again, so i wish you all a good nights sleep

StacFace

MSE_Emily_W said:

• How have you found your overall experience of saving into, or using, your LISA?

I've found it very straightforward. I transfer the full £4k from one of my other savings accounts at the start of each tax year and get the bonus credited a couple of months later. I haven't bought my first home yet so can't comment on the withdrawal process.

MSE_Emily_W said:

• Have you found that the £450,000 property limit is high enough for your needs, or is it too low? How has this impacted you?

I live in the North so £450,000 is more than enough for me. I do think that it should be increased for those living in London or other parts of the South where property prices are much higher. I've seen people suggest regional caps similar to help to buy, but I found the regional cap for the North to be slightly too low, which suggests maybe it was in other parts of the country too (particularly for those living in cities, and/or those who can't afford to buy until later in life and may have children to house by then).

MSE_Emily_W said:

• Are there any changes that could make the LISA work better for you? What, if anything, would you improve about it?

There's two changes I'd like to see:

1. If you inherit property then I understand losing the bonus, but you should still get to keep the full original amount you invested imo.

2. I'd like to see the rules about having to buy with a mortgage amended, to allow you to also use the Lifetime ISA as a deposit when you are purchasing on a gradual ownership scheme (where a company buys the house, you buy the % you can afford and pay rent on the rest, staircasing up as you're able to). The main issue I've had with trying to buy hasn't been saving a 10% deposit, it's getting a bank to agree to lending me 70% because of income multiplier rules.

kiloranbay

When the penalty increased from 20% to 25% I didn't worry as I thought I'd still be getting to use all the money on buying a house - turned out I was one of those ineligible first time buyers mentioned above who wasn't going with a mortgage. 

I used AJ Bell, stocks and shares, and they didn't charge any additional withdrawal penalty which was a relief as I'd heard of other ISA providers doing so. "My" fund performed so well that I still got out what I'd put in (well... If we ignore inflation!), but it would have been a terrible hit if I'd had a cash LISA. 

My withdrawal was slightly painful as I diligently sent a signed paper form by post, as instructed in my account, and didn't hear back - after ten days I followed up by email and was told it didn't arrive. Happily I was then told I could email it. 

I'd like to see conveyancing fees or other associated buying costs able to come out of LISA savings if there is more than a deposit's worth in the account. It gets transferred to the solicitor anyway. 

I don't see a need for an upper limit on the purchase price at all, especially given it affects only those who are already affected by missing out on the FTB stamp duty relief. FTB seems like a good enough criteria to me. In fact I'd like to expand that to FTB with or without mortgage, and if they didn't have any property in their name when they started investing in the LISA (i.e., had not yet inherited part of a property) that would be good enough for me! 

(Then again, and I don't know if it counts as a lack of empathy or not, but personally I find it hard to imagine the £450,000 being too low. In most of the country a 3 bedroom maisonette costs less than half of that, and even in London there are options.

Maybe I'm having a failure of imagination because most of the renters I know are living in properties valued under £450k?) 

Riverside_Ang

My son has a help-to-buy ISA and the property value limit is only £250k!!!  Please can MSE put pressure on the government to increase the H2B limit?  It seems to me that that should be a much higher priority than the already quite high £450k limit on a LISA (except for those needing to buy in London)...  Thanks in advance!

silvercar

singhini said:

silvercar said:

singhini said:

When the LISA scheme was launched i thought it was a good idea (25% uplift is definitely worth having). 

In fairness to the government the LISA was not solely about houses/housing, they did say "You can use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. 

i thought the government were very clear with their explanation and examples Lifetime ISA - GOV.UK (www.gov.uk)

I'm struggling to see what the national issue is for a national camping: Someone is aged between 18-40 years old, putting money into a LISA and receiving potentially upto £1,000 PA and then they can potentially use the money to buy property upto £450,000 or less  (the £450,000 seems fair to me). If you don't buy a property you can take the money penalty free when your 60 (either by cashing it in or transferring it to another ISA (which still keeps the money within a tax free wrapper). 

Seems  fair   good.

Have i miss understood something?   (if there's a call for a campaign i must have)

The problem is for people who have saved their deposit money into an ISA and then are not eligible to use it on a home purchase. It is unfair that they can't get the money they have put in back out without a large penalty. They need the money for their deposit, they don't want to save it for later life. Yet they have to lose a portion of their hard earned cash to do so.

Ideally the £450k limit in London needs lifting, but failing that it should be possible to withdraw your money without penalty if you are using it for a deposit on a home purchase that isn't eligible. There is also the case where people are no longer considered first time buyers through no action of their own eg they have inherited part of a home.

Thanks for the explanation i honestly do appreciate it but I'm still struggling with the details I'm afraid.

When you say "not eligible to use it on a home purchase". you mean on a purchase greater than £450,000   (if the purchase was less than £450,000 then it would be OK).

Also is 6% a large penalty?   (sounds like the government are getting back their 25% bonus money aswell as 6% interest for the tax payer.   Wasn't PPI interest 8%).

Your last point regarding circumstances someone is no longer considered a first time buyer is interesting. IMHO they should still be regarded a first time buyer since they didn't purchase a property, it was inherited.

there just my thoughts  (i will bow out of this conversation now and i wish you all a good nights sleep).

Exactly that, property value over 450k in London. Money diligently saved and needed for a deposit would mean giving up 6% of it. Can’t say keep it for retirement, as it would be needed for deposit. This for a 2 bedroom flat, nothing extravagant, other than wanting to leave in London relatively near to work.