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

singhini

silvercar said:

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. 

There's your mistake!
The harder you work and the more you save..... the more government punishes you!! (FACT)
Just wait and see what happens to you if you get made redundant (All the tax you've paid in Income Tax & National Insurance doesn't get you diddly squat, you will get the same as someone who's not paid a single penny into the system (Infact there's a chance you might be worse off...... you might not be able to claim certain benefits like free prescriptions, free opticians, free dentistry care etc.... yet your funding those services

Only one thing to do......... Get Martin/MSE to lobby government and insist on reducing the 25% penalty to 20% aswell as increasing the threshold from £450k to £650k 

Helplesssheep

I put 4K into a LISA annually from when the first very product launched, and I bought this past year (entirely with my own money and mortgage, ie no gifts) in London. My LISA helped me enormously, in terms of the extra I could save. As a solo buyer, it gave me a boost in savings and I was never going to be able to afford to buy a property over 450k alone anyway.

If I’d been buying with a partner in London, then yes I would have had issues with the 450k. But for single buyers on normal salaries (ie where 450k would be out the picture), and people buying outside of London, I think it is brilliant.

[Deleted User]

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

It’s been very good, the providers of cash isa accounts is small, but I did find one and managed to save about 25k or so. That’s 5k for free! It was a help when buying my home.

• 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?

My property only cost 270k so it was very suitable. 450k is too high.

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

Simply the amount you can save per year, it really should be 8k a year with a 2k bonus. More providers. The main banks don’t offer them.

Josh_Rogan

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

awesome - £4k each for both me and my partner, paid in very quickly - excellent scheme that we've been using for years!

• 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?

too low!  Never thought about this 5 years ago when we started.  But now in London, and looking for a house on the outskirts, we're limited!  Instead of being able to use our money (with the generous gov bonus) on one property, we have to consider taking the penalty to get a place big enough / right location / good enough quality OR choosing something smaller and seek to move again afterwards. 

Conundrum! 

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

yes, both of those suggestions - increase the upper limit in London to £650k!  or reducing the penalty so we don't lose out.  

I understand the policy was designed for those that needed help to get on the property ladder, but with London prices rising so much over the last few years it has certainly put us in a bind.

Has there been any response from the government on the policy?  Do you think it is likely to change?  We are approx 12 months away from pulling the trigger - and any indication would be super helpful

DRY411S

My son has a LISA. Over the years, I have gifted him the £4K as a bank transfer, which he has then deposited into the LISA. I haven't gifted him anything in this tax year.

He is now using the LISA as the deposit on his first home. His solicitor is claiming that all or part of this LISA is a gifted deposit by me, wanting to charge my son a 'gifted deposit' fee, and asking me to complete statements that I have no financial interest in the property.

That's my experience with LISA, but it's also a question. I think this is wrong. Is the solicitor correct?

By the way, the LISA is with Hargreaves Lansdown and is a stocks and shares LISA. Turns out HL don't invest the 25% each year, but pay it as a cash lump sum when the LISA is redeemed. I don't know whether this is 'normal' for S&S LISA.

BobT36

MSE_Helen_K said:

Hi everyone, thanks so much for all of your feedback on the Lifetime ISA. We've today launched an MSE campaign on it.

For the short read, see our news story here: 
Change needed to help half a million younger people with Lifetime ISAs

For the long read, see our full report here: Locked out by the LISA

If you haven’t already, join the forum to reply.

@MSE_Helen_K Can we have a MSE campaign please to up the old Help2Buy ISA limit to match the LISAs? 
I DON'T have a LISA because me and my GF are 35 and want our first home so we can settle down and finally have a family, (we've been putting it off due to careers and getting S21'd out from our previous two rentals. Due to LLs selling up or wanting their own family in). We don't have THREE tax-year spans of time to transfer all the cash into a LISA, and don't like the idea of the money being "stuck" if we needed it in an emergency.

Irritatingly we followed the govt's advice and maxed out the H2Buys but of course house prices shot up WELL beyond the max of those. I messaged the govt departments but they kept just saying the average price used for H2Buys was 190k blablabla, quoting 2019 figures, well beyond the massive rise...


I can't see the issue with either allowing full transfers into the LISA (as long as it comes from a H2Buy ISA) or simply upping the cap to match, for those who still have the H2Buy ISAs.  

Bonbon123

I’ve been trying to get a place in London for a few years now and started putting money into my lifetime ISA since it first started so basically all my savings have gone into it. I think some people here are saying that if you can afford over the 450 limit then you’re not somebody who needs it but in London, finding somewhere half decent below this figure is extremely difficult. You have no option. 

I am a junior doctor who wants to live a commutable distance to work for the purpose of getting home safely after night shifts and not having to rely on long trains which are often cancelled or delayed - then leaving the ward short-staffed.

I don’t have any other savings and felt like this was my only option to try and afford somewhere but it now means that I have to pay a huge penalty. 

In areas of ridiculously high average house prices the government needs to increase the limit and stop screwing over people who have put everything they have into these ISAs. Or decrease the penalty from 25%. 

What is the best way we can make them listen? 

GosCarCat

We're struggling so badly with the limit it's soul destroying and stressful! We both opened LISAs in 2018 whilst living in a city we were renting in. We knew we'd want to move home in a couple of years and buy. COVID hit and we got stuck in said city, unable to move home or buy a property. In 2021 we found out we were due twins! They were born in 2022 and we moved back up to Scotland to be closer to family. 

Although the average house price in Glasgow is about £250k, this includes all sizes and all areas. Don't forget there are very large areas of Glasgow that are pretty deprived and not particularly safe. In the areas we are searching for, most home reports for 3 beds are coming back around the 400k and going for about 20% over value it's madness! I reiterate, this is in GLASGOW, Edinburgh, Oxford, London all worse. 

We feel so defeated and not really sure what our next step is, we can't afford to lose the 25% and we can't offer what non first time buyers can on these properties! 

I think it should at the least be based on the valuation of the house (the mortgageable value) and anything you offer over shouldn't count, but realistically the limit needs to rise. 

Don't forget a lot of first time buyers are no longer 20yolds buying a one bed flat, but 30 something professionals with years of saving, and young families looking for their permanent home. 

amanda1024

I'm in the minority I think, in that I opened a lifetime isa to save for retirement (I'm lucky enough to already own a house, and have a decent pension but it's pegged to state retirement age and I want to be able to retire early). So my main issue with the lifetime isas on the market is that the rates are so low. It's essentially a long-term isa, so there should be rates >5% like there are for 1 year + fixed term isas; instead rates are lower than for easy access savings! There's been quite a bit of talk about banks ripping off savers, by not passing on base rate increases, but lifetime isas don't seem to get a mention. 

silvercar

My adult kids had to make the choice to continue with their HTB ISAs because the limit on the LISA would be too low for them to buy in London. So they have lost out because of the rules. If you do manage to increase the limit, they will have lost out because they followed the rules that were in place because they didn't want to risk 6% of their savings by having to cash out to pay the deposit.