Lifetime ISA/Help to Buy. Help!

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JackP123
JackP123 Posts: 10 Forumite
in Savings & investments
Hi everyone.

I am looking to buy a home in the next 12-18 months.

I was always going to open a Help To Buy ISA however I came across Lifetime ISA's, especially with MoneyBox.

The immediate advantage of a Lifetime ISA for me is that I can put in £4000 a year, as apposed to the £2400 on help to buy.

I was just wondering if anyone can recommend this way, for buying a home, and for the short timescales I am looking, whether a Lifetime ISA is best?

Would you recommend having both accounts open, and paying for example £300 into a lifetime ISA and £200 into a Help to Buy, and at the end, transferring the cash from the Help to Buy into the Lifetime ISA and proceed from there?

Any tips, tricks and advice will be greatly appreciated.

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  • eskbanker
    eskbanker Posts: 31,054 Forumite
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    When buying your first property, you can only benefit from the 25% government bonus on one or the other of these accounts, not both, so transferring HTB into LISA is effectively no longer an option if you're already filling up your LISA with the annual £4K.

    You can fill up a HTB solely to benefit from the interest though, as this is typically more generous than most accessible accounts.

    In your shoes I'd avoid investing in a S&S LISA and would stick to the cash variant, which narrows the choice down to one, namely Skipton Building Society.

    Further info at:
    https://www.moneysavingexpert.com/savings/help-to-buy-ISA
    https://www.moneysavingexpert.com/savings/lifetime-ISAs
  • aj23_2
    aj23_2 Posts: 1,155 Forumite
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    edited 8 May 2018 at 4:22PM
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    A Lifetime ISA would be better. You'd get more back on it in 12-18 months. You can only use the bonus from one or the other, the Lifetime ISA would generate more in bonuses and the HTB, with interest, would get you about £30 on your deposits. I don't see the point of paying into a new HTB to transfer into a LISA in 12-18 months. You may as well just use the LISA allowance for two tax years.
  • AimHigh
    AimHigh Posts: 135 Forumite
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    edited 8 May 2018 at 3:54PM
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    I believe MoneyBox only offers S&S LISAs which means your capital would be at risk. Given you want to buy in 12-18 months I would steer clear of any form of stock market investment etc.

    Skipton Building Society offer a cash LISA which may have low rates (0.75% I believe) but will mean your money is safe and still earning the £1000 bonus. Again, given you want to buy in 12-18 months, the £1000 bonus would far outweigh interest benefits from a HTB ISA.

    If I were you I would open the Skiption LISA (with the minimum amount otherwise they'll close it) and then open the highest regular saver/current accounts (Nationwide tends to have the best options at 5%). This will allow you to get as much interest as poss over the next year and then you can deposit the £4000 at the end and receive the £1000 bonus.

    However, bear in mind that a) your LISA must be open for 12 months before you can use it so if it's likely to be less than 12 months, open a HTB ISA and b) regular savers usually lock your cash away so make sure you can get £4000 together to put into your LISA before the tax year is up. I think Nationwide's regular saver is easy access so that wouldn't be a problem. And c) applying for current accounts etc may have an affect on your mortgage application so open them ASAP if that's the route you want to take.

    Edit: to clarify - the bonus is paid based on tax years rather than calendar years so when I suggest dropping the £4000 into the LISA before a year is up, it would need to be before April 2019. If you have the funds you could then make use of the 2019/2020 LISA allowance/bonus also.
  • jigs123
    jigs123 Posts: 1 Newbie
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    Hello, Just wanted to ask on this, if I were to open a LISA account.. (I dont have a property under my own name and have never purchased any in my own name). But my husband has - so i am married. But the property and mortgage is under his name,.

    Does this affect me at all? And am i still classed as a first time buyer/able to put money into a LISA acc and be classed as first time buyer?

    Thanks
    J
  • eskbanker
    eskbanker Posts: 31,054 Forumite
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    jigs123 wrote: »
    Hello, Just wanted to ask on this, if I were to open a LISA account.. (I dont have a property under my own name and have never purchased any in my own name). But my husband has - so i am married. But the property and mortgage is under his name,.

    Does this affect me at all? And am i still classed as a first time buyer/able to put money into a LISA acc and be classed as first time buyer?
    Yes, you're still a first time buyer as far as LISA rules are concerned, as you haven't owned a property as such.

    For future reference, normal etiquette on here would be to either start your own thread or ask on the main LISA thread on the ISA board!
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