Closing Help to Buy ISA / Opening LISA

LineOfDuty468

I currently have a historic Help to Buy ISA with Halifax that has reached the maximum limit for Government bonus.

I'm not planning on purchasing a home within the next three years, and therefore want to close it and move it to a LISA to further save before buying for a home. 

Given that I can only transfer £4000 a year (Govt. max cap) into a LISA, is it more worthwhile closing the entire Help to Buy and moving the existing funds into both a Cash ISA and another high interest savings account? Baring in mind the £20,000 (soon to be £16,000) limit on putting money into ISAs.

I have checked online and it appears that there are no penalties nor downsides from doing the above. Have I misunderstood or would this be a useful idea to both begin moving into the LISA, and also maximise on an offered interest rate on the rest of the savings from the Help to Buy?

eskbanker

I wouldn't let the future plans for annual deposits into cash ISAs (£12K from 2027) to influence your plans but agree that transferring £4K/year from HTB to LISA is likely to be beneficial - unlike HTB and other cash ISAs, one downside of saving in a LISA is the withdrawal penalty for accessing the money other than for a qualifying property purchase before you reach 60.

It was also announced in the November 2025 that it's planned to replace the LISA for first time property purchasers - it is plausible (but unlikely IMHO) that migration options may be limited, but details are as yet unconfirmed.  No harm in opening a LISA for now and reviewing the situation before the end of this tax year, in case the direction of travel is clearer by then.

For the money currently in HTB that exceeds the LISA drip-feeding figure, it would make sense to maximise interest on it, wherever that may be....