Tax Credits to Universal Credit but I have a LISA

Hawley_Gryphon

Hi, I'm extremely worried about the roll out of universal credit. Everyone is due to be migrated over by the end of 2024 and I wouldn't be eligible. I took out a government endorsed help to buy LISA in order to start saving for a deposit for a first home. I've been saving into it for years. First it was a help to buy ISA and now it's a life time ISA and I've been adding money to it each week as the years have gone by. I've cut many corners to make savings and we go without a lot of things in order to put as much money aside as I can. My deposit savings are now just under £27,000. Yet, every time I look into whether I can buy a house yet, I can't get anyone to offer me a mortgage of more than (at the very top end) £57,000. I've been saving, waiting, checking, saving, waiting, checking over and over again as time goes by. The deposit savings are increasing but, so are the house prices. It's like I'm running on the spot.

Anyway, the long and the short of it is, this universal credit migration is a terrifying prospect for me because work and child tax credits cover a large chunk of my monthly rent payments. The universal credit savings threshold is £16,000 which means that I wouldn't qualify for it. I can't access my LISA without losing 25% of the whole amount and I have scrimped and saved for years to try and get that deposit together. 

I've been desperately trying to find a house I can buy with what I've got, but the only things I've been able to afford has been a camper van or a lock-up garage. Neither of which would qualify as a first time home. 

I don't know if anyone on the money saving forum has any pearls of wisdom or advice for me, but I'm a single dad and I don't really have anyone else I can talk/vent to about all this so this seemed like the best place to come just to find people to talk to about it.

Thanks.

calcotti

When you are required to migrate to UC your savings over £16,000 will be ignored for one year. Therefore you will yet UC for that year, after that the UC will stop if you still have over £16,000 at the end of the year.

A LISA of £27,000 is treated as £20,250 for UC because they they into account the penalty for withdrawal.

Rubyroobs

If you are paying a lot of your rent from your child and working tax credits then you could be better off on Uc due to getting a rent element.

HillStreetBlues

Rubyroobs said:

If you are paying a lot of your rent from your child and working tax credits then you could be better off on Uc due to getting a rent element.

Only for the year that the savings are exempt thou.

kaMelo

Knowing what your maximum mortgage offer is likely to be, work out the size of deposit you'll require in addition to this to be able to afford the house you would like. Given that UC will pay towards (or all of) your rent rather than you paying it from your WTC/CTC, is it realistic that you can save enough to reach the deposit you require within the twelve months that your savings will be disregarded?

huckster

Have a look into shared ownership.

https://www.gov.uk/shared-ownership-scheme

rachlikeswinter

calcotti said:

A LISA of £27,000 is treated as £20,250 for UC because they they into account the penalty for withdrawal.

Is this true? Do you have link / govt source website for this? My partner got made redundant in July and is still out of work - he can't access UC because of his LISA (which we need to use to buy together one day!) but I have a feeling that perhaps he is under the threshold if you take 25% off.... thank you x

Spoonie_Turtle

rachlikeswinter said:

calcotti said:

A LISA of £27,000 is treated as £20,250 for UC because they they into account the penalty for withdrawal.

Is this true? Do you have link / govt source website for this? My partner got made redundant in July and is still out of work - he can't access UC because of his LISA (which we need to use to buy together one day!) but I have a feeling that perhaps he is under the threshold if you take 25% off.... thank you x

In calcotti's absence …
This is from ADM H1

"Lifetime individual savings account
H1659 …This Lifetime individual savings account should be treated as capital from the outset with a value of
1. 75% of the surrender value where the person is under age 60 or
2. 100% of the surrender value where the person is over age 60
taken into account."

https://www.gov.uk/government/publications/advice-for-decision-making-staff-guide Chapter H1

Edit: the savings threshold includes all savings, not just the LISA.  And if you live together it would have to be a joint claim, so including any of your savings as well (plus entitlement would be worked out based on your income too).

poppy12345

Spoonie_Turtle said:

rachlikeswinter said:

calcotti said:

A LISA of £27,000 is treated as £20,250 for UC because they they into account the penalty for withdrawal.

Is this true? Do you have link / govt source website for this? My partner got made redundant in July and is still out of work - he can't access UC because of his LISA (which we need to use to buy together one day!) but I have a feeling that perhaps he is under the threshold if you take 25% off.... thank you x

In calcotti's absence …

As you've mentioned his name, i'm afraid i haven't received any response to any of my 3 messages sent to him.

HillStreetBlues

poppy12345 said:

As you've mentioned his name, i'm afraid i haven't received any response to any of my 3 messages sent to him.

I'm very sorry to hear that.