Help to Buy ISA & LISA - what is my best option for my situation? 5 December 2022 at 6:19PM edited 5 December 2022 at 6:24PM in ISAs & tax-free savings 3 replies 71 views

87mave

Hi there, just a bit of help needed here as I'm not the most fluent when it comes to these things.

I opened up a Halifax Help to Buy ISA back in August 2016 and just put the odd few hundred quid in there now and again but had transferred everything out when I had money problems. I last put some money in it in March 2022 but I withdrew it instantly as I wanted to put it into a LISA with Moneybox as I heard good things. I opened and put £3800 into the Moneybox LISA in March and then maxed out the next month (new tax year) at £4000.

Now I'm in a position to buy a home at a really good price that's in motion now, but the thing is, because I opened up the Moneyboy LISA in March this year, I'm not eligable for the 25% gov bonus as you need to have it open at least a year. Halifax have a thing where you can transfer the whole value from one HTB account to theirs, but not from a LISA.

I have a few grand I was keeping spare but if I was to put that into the Halifax HTB as a lump sum for this year, could that be used towards the HTB as the main source and I get the 25% gov bonus? But also, could the remaining £7800 in the LISA be used for the purchase in sale (without the 25% gov bonus and minus any penalties) towards the deposit?

Hope this makes sense. I know I've made a mess of this but I'm honestly so crap at understanding these things and just wish I kept the Halifax HTB ISA as this has just confused it all. I just want to make the correct choice for my situation.

Thanks!

eskbanker

87mave said:

I have a few grand I was keeping spare but if I was to put that into the Halifax HTB as a lump sum for this year, could that be used towards the HTB as the main source and I get the 25% gov bonus?

Not an option, there is no facility to pay more than £200 into a HTB ISA in any month (except when originally opening it).

87mave said:

But also, could the remaining £7800 in the LISA be used for the purchase in sale (without the 25% gov bonus and minus any penalties) towards the deposit?

If you paid £7,800 into a LISA earlier in the year, it should have been boosted to £9,750 with the bonus - you can withdraw it before the year but, as you say, you'd incur the penalty, which would reduce it to £7,312.50 plus any interest earned.

87mave

Not an option, there is no facility to pay more than £200 into a HTB ISA in any month (except when originally opening it).

Thanks, I remember this now.

If you paid £7,800 into a LISA earlier in the year, it should have been boosted to £9,750 with the bonus - you can withdraw it before the year but, as you say, you'd incur the penalty, which would reduce it to £7,312.50 plus any interest earned.

Yes, I have the bonus, so if I it was used towards the house purchase now it would have the penalty charges incurred? Or just if I withdrew the money?

eskbanker

87mave said:

f you paid £7,800 into a LISA earlier in the year, it should have been boosted to £9,750 with the bonus - you can withdraw it before the year but, as you say, you'd incur the penalty, which would reduce it to £7,312.50 plus any interest earned.

Yes, I have the bonus, so if I it was used towards the house purchase now it would have the penalty charges incurred? Or just if I withdrew the money?

Either, it doesn't make any difference - you can only avoid the penalty if you use it (a) for a first time property purchase* and (b)  at least a year after opening, so if you breach either of those conditions then the penalty is applied. 

* ignoring the unpenalised access once you're 60