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Drawdown LISA early

Nath5994
Nath5994 Posts: 2 Newbie
in House buying, renting & selling
Guys, I'm having a bit of a nightmare here and would really appreciate some help/advice.

Here is a bit of background:
Me and my partner are buying a house (first time buyers).
We are due to complete on 1st June.
I have a LISA that is just under 11months on.

The problem:
The LISA isn't over 12months old so it looks like the government will charge me a 25% fee. The fee is on the whole account value so I'll come out with less than I put in.

Does anyone have any advice of what I should do? Would it be possible to drawdown the money in July (when it's 1 years old) and get the government grant through my conveyancer even though we complete in June (we can still afford the deposit). Or do I just bite the bullet and lose 25% of the money in the account?

It just seems unfair that I'll be penalised even though its being used to buy my first house.

Thanks in advance,

Nathan

Comments

  • GoingOn30
    GoingOn30 Posts: 231 Forumite
    First Anniversary Name Dropper First Post
    I doubt very much whether you could draw the funds after the completion,

    Have you looked into delaying completion?
  • Nath5994
    Nath5994 Posts: 2 Newbie
    It'd mean delaying the chain by a month and a half but I suppose it could be an option if we were to ask everyone in the chain. Ideally though we'd like to move on the original date (1st June).
    I wouldn't be too bothered if the government didn't give me the bonus, it's the fact that they're taking part of my savings too. I've spoken to HMRC over the phone and they were no help haha.
  • Lolly88
    Lolly88 Posts: 322 Forumite
    First Anniversary Combo Breaker
    The account has to be 1 year old if not the penalty will apply. The only option to avoid this in regards to your house purchase is to change the completion date. There are lots of threads about this in the savings ISA part of the forum, you might find it helpful to read those.
    Homeowner
    :j
  • rwcwilson
    rwcwilson Posts: 45 Forumite
    edited 24 May 2018 at 7:38PM
    As Lolly88 says, you can withdraw from the LISA penalty free in the first 12 months.

    Be warned if you want to wait and withdraw after the bonus has been applied: not only does it take up to 30 days for HMRC to credit the account, it then takes up to another 30 days for the withdrawal to happen. We are currently in the process of buying a house and its painfully slow getting the LISA withdrawn (not helped by the fact the banks are new to it as well).
  • pink_pirlie
    pink_pirlie Posts: 238 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    rwcwilson wrote: »
    As Lolly88 says, you can withdraw from the LISA penalty free in the first 12 months.

    Be warned if you want to wait and withdraw after the bonus has been applied: not only does it take up to 30 days for HMRC to credit the account, it then takes up to another 30 days for the withdrawal to happen. We are currently in the process of buying a house and its painfully slow getting the LISA withdrawn (not helped by the fact the banks are new to it as well).

    This isn!!!8217;t entirely accurate.

    You can not withdraw penalty free in the first 12 months.
    You could withdraw penalty free in 17/18 (which is the first 12 months LISAs were available) but that ship has sailed.

    The bonus is paid monthly after deposit, not 30 days from asking for the money. The OP!!!8217;s bonus may have already been paid. LISA providers request this monthly from HMRC, unlike H2B where the solicitor requests it.

    Also, we got our money out our LISA with 1 day notice so it doesn!!!8217;t have to take 30 days if you are prepared and communicate fully.

    However in response to the OP!!!8217;s conundrum, the only option to avoid the 25% penalty is to delay completion until after the 1 year anniversary.

    You can complete all the declarations now, send these to the bank and your bonus should be paid before then or have been paid already depending on when you deposited the funds.
    Your other option is to leave the LISA money in the account until you!!!8217;re 60?!

    For future reference, you!!!8217;re be better off posting this sort of question on the ISA forum but you won!!!8217;t get any different advice than what!!!8217;s posted here.
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