Lifetime ISAs guide

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  • Ed-1
    Ed-1 Posts: 3,894 Forumite
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    apinner wrote: »
    So in my instance it would make far more sense to do the following:

    Now - Open up LISA with minimum contribution
    Now - Establish savings account paying better interest than the LISA

    April 5 2018 - Transfer £4,000 into LISA
    April 6 2018 - Transfer £4,000 into LISA

    In terms of receiving bonuses, if I were to engage in the above transactions I would expect them as follows:

    April 201[STRIKE]9[/STRIKE]8 - £1,000
    May 201[STRIKE]9[/STRIKE]8 - £1,000

    Then, If I were to deposit an additional £4,000 on April 6 2019 I can expect to receive the bonus the following month?

    Thanks for the help!

    Corrected.
  • eskbanker
    eskbanker Posts: 31,218 Forumite
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    apinner wrote: »
    Now - Open up LISA with minimum contribution
    Now - Establish savings account paying better interest than the LISA

    April 5 2018 - Transfer £4,000 into LISA
    April 6 2018 - Transfer £4,000 into LISA
    Just a couple of minor points - even though you could indeed pay into your LISA on the very last day of the tax year, it would be prudent to do so a few days earlier just to be on the safe side, given the 'use it or lose it' nature of the annual allowance.

    Also, since you have to make a minimal contribution when opening the LISA, the year-end payment needs to be £4K minus the opening contribution....
  • slnwrd
    slnwrd Posts: 1 Newbie
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    We currently have HTB ISAs, but where we live (outside of London) the 250K limit buys nothing. We were looking to open the lifetime ISA instead and transfer our savings over but are worried what would happen if we ended up buying somewhere for >450k - with the rate prices have gone up in recent years this is not implausible. As I understand it we could then end up losing some of our savings (or they'd be stuck until we're 60!). Am I correct in thinking this?
  • eskbanker
    eskbanker Posts: 31,218 Forumite
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    Yes, the three options for LISA contents are:
    1. Use for a first-time property purchase up to £450K
    2. Don't withdraw until after 60
    3. Pay a penalty of 25% of amount withdrawn for any other reason
  • GavinMal
    GavinMal Posts: 1 Newbie
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    Hello all,

    I opened a Nutmeg Stocks and Shares LISA at the first available opportunity this tax year. I am now looking to transfer that into Skipton’s LISA.

    However, after completing all the documentation Skipton have told me that it is not possible to transfer my Nutmeg LISA in without opening a new account with Skipton and then transferring in.

    Of course, this would re-start the clock on me needing to hold the account for one year before using any of the monies so I do not want to open a new account with Skipton.

    Has anyone else had a similar experience transferring a S&S LISA into Skipton’s Cash LISA?

    Thanks,

    Gavin

    (As an extra thought, I was wondering if I transfer my H2B ISA to the Cash LISA at Skipton, I may have more joy that way?)
  • Ed-1
    Ed-1 Posts: 3,894 Forumite
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    GavinMal wrote: »
    Hello all,

    I opened a Nutmeg Stocks and Shares LISA at the first available opportunity this tax year. I am now looking to transfer that into Skipton’s LISA.

    However, after completing all the documentation Skipton have told me that it is not possible to transfer my Nutmeg LISA in without opening a new account with Skipton and then transferring in.

    Of course, this would re-start the clock on me needing to hold the account for one year before using any of the monies so I do not want to open a new account with Skipton.

    Has anyone else had a similar experience transferring a S&S LISA into Skipton’s Cash LISA?

    Thanks,

    Gavin

    (As an extra thought, I was wondering if I transfer my H2B ISA to the Cash LISA at Skipton, I may have more joy that way?)

    It wouldn't restart the clock. It goes from the date of the first opened LISA.
  • andy013
    andy013 Posts: 101 Forumite
    edited 12 September 2017 at 1:32AM
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    Does anyone else think that the MSE article on this is slightly biased to favor HL over YouInvest?

    In the article they state about YouInvest :
    One thing to watch out for is that this LISA could have high transfer fees. It charges a £25 fee per holding to transfer to a new provider - fine if you're in one fund, but potentially expensive if you've several different funds or share holdings.
    and for HL they say:
    HL has a relatively low charge to transfer out - good if you think you'll want to move providers to chase the best deals as they come along.
    Yet HL also charges £25 per holding to transfer to another provider. It also seems to have an additional £25 charge on top of this (an account closure fee). They also charge £25 if you want to transfer in cash, whereas YouInvest will do this for free. By all accounts YouInvest is either cheaper or equivalent to HL and that's not even looking at the platform fee!

    Here are the 2 pages for you to compare yourself: Hargreaves (check under account administration and transfers) and YouInvest

    I guess because MSE don't get referral money from YouInvest they are favoring HL. Naughty, naughty! :naughty:

    [EDIT] Looks like they updated the article. Perhaps it was just an oversight but HL never had low fees to transfer out AFAIK.
  • 1davidmprice
    1davidmprice Posts: 1 Newbie
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    Hi all,

    Does anyone know what will happen if there is more than is needed for a house deposit in a lifetime ISA i.e. more than a 7% of deposit cost as I understand it deposits are only calculated in 5% multiples. Would you have to transfer out the exact amount and leave the rest in the account?

    Thanks
  • pphillips
    pphillips Posts: 1,631 Forumite
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    A lifetime ISA can be used towards your first home or retirement. Therefore, any surplus that is not used towards your first home will stay locked in the lifetime ISA until you turn 60 (unless you die before then or become terminally ill).
  • eskbanker
    eskbanker Posts: 31,218 Forumite
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    1davidmprice wrote: »
    Does anyone know what will happen if there is more than is needed for a house deposit in a lifetime ISA i.e. more than a 7% of deposit cost as I understand it deposits are only calculated in 5% multiples. Would you have to transfer out the exact amount and leave the rest in the account?
    The multiples of 5% is news to me but I haven't bought a property or taken out a mortgage for a long time!

    However, the LISA funds can be used for both the exchange deposit and the mortgage deposit (the same word is confusingly used for both, but see the MSE explanation of the difference), so you will be able to use all of your LISA money towards your property purchase if you want to, one way or another - your conveyancer and/or mortgage broker will help you through this.

    Also, according to some seemingly well-informed posters on the mortgages board, some conveyancers happily turn a blind eye to the rule that HTB (and presumably LISA when applicable) funds can't be used for stamp duty or legal fees and simply put the proceeds towards the overall completion statement without applying strict differentiation as to exactly how they're actually allocated....
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