Lifetime ISAs guide

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  • OctoMonkey
    OctoMonkey Posts: 1 Newbie
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    Hi,

    Had a look through the thread but couldn't find the exact circumstances that we're in to answer my question!

    I opened a Skipton LISA on 22nd July 2017 and paid in £4,000 before the end of the 17/18 tax year and have recently received my £1,000 government bonus into the account.

    We're about to start discussing exchange and completion dates with our solicitors for the house we are buying and was wondering if it would be possible to still claim the £1,000 bonus if the completion date was 23rd July 2018?

    I know we can send the instructions to Skipton in advance that we will be withdrawing the money for a house purchase, but can we ask them to only release the funds on 23rd (i.e. after the 12 months minimum has passed) to ensure that the withdrawal qualified to retain the £1,000 bonus? Or is it too short of a time frame to expect that the LISA withdrawal and completion could happen on the same day?

    Thanks in advance for any advice.
  • masonic
    masonic Posts: 23,278 Forumite
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    OctoMonkey wrote: »
    I know we can send the instructions to Skipton in advance that we will be withdrawing the money for a house purchase, but can we ask them to only release the funds on 23rd (i.e. after the 12 months minimum has passed) to ensure that the withdrawal qualified to retain the £1,000 bonus? Or is it too short of a time frame to expect that the LISA withdrawal and completion could happen on the same day?
    From Skipton's FAQ:
    "You!!!8217;ll need to complete an Investor Declaration form to access your Lifetime ISA funds and the form needs handing to your conveyancer who will in turn complete a Conveyancer Declaration. Once we receive the correct information from your conveyancer, we will email you to confirm before transferring the money to your conveyancer within 30 days. From this point the purchase needs to complete within 90 days or your conveyancer needs to apply for an extension."

    So it seems unlikely the "within 30 days" could be a nominated day. You would also need to confirm how many days in advance of completion your conveyancer would require cleared funds. If this is not 0, then your plan will not work.
  • claireportik
    claireportik Posts: 1 Newbie
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    Hey guys,

    My lifetime isa is nearly at its 1 year anniversary so I'm starting to think about buying now.

    Now my question is, if I only want to use half the money in my lifetime isa for the deposit, can I use the other half for renovations? Will I be charged the 25% withdrawal fee if I do this? Or can the other half be used for fees?

    Thanks in advance.
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    When buying a first-time property, you can only use penalty-free LISA money towards the purchase value of the property itself, but not fees or renovations.

    https://www.gov.uk/guidance/lifetime-isas-for-isa-managers#withdrawals-for-first-time-residential-purchase clarifies that the LISA holder must formally declare
    that the withdrawal will only be used to finance the purchase price of the property
    where
    the purchase price is the value required to be paid under the sale and purchase agreement entered into in connection with the acquisition of an interest in land, this does not include any separate consideration to purchase any fixtures and/or fittings
  • masonic
    masonic Posts: 23,278 Forumite
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    claireportik wrote: »
    Hey guys,

    My lifetime isa is nearly at its 1 year anniversary so I'm starting to think about buying now.

    Now my question is, if I only want to use half the money in my lifetime isa for the deposit, can I use the other half for renovations? Will I be charged the 25% withdrawal fee if I do this? Or can the other half be used for fees?

    Thanks in advance.
    You could always use the money to get a smaller mortgage, borrow on a 0% credit card and put the savings from the smaller mortgage repayment towards repaying the card.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    masonic wrote: »
    You could always use the money to get a smaller mortgage, borrow on a 0% credit card and put the savings from the smaller mortgage repayment towards repaying the card.

    I have found that conveyencing usually takes longer than expected by which time some additional savings should have accumulated.

    Alex.
  • spinnin
    spinnin Posts: 9 Forumite
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    Apologies if this has already been touched on, but I couldn't check every page!

    My wife has just opened a LISA for our first home together. She already has a help to buy ISA, but is planning on transferring this in to avail of the bigger LISA bonus.

    In the conditions, it seems to suggest you can transfer in a help-to-buy (once), it won't affect the £4k limit for that year, and you will get the 25% balance on all.

    I also believe it is the case that you can deposit lump sums into a LISA.

    This being so, then could we continue to lodge £200 pm into the help-to-buy ISA until the end of this tax year, then transfer it across and lodge another £4k into the LISA (either throughout the year or in lump sum), to maximise the allowances? Or are there any issues with lodging to both in the same tax year?
  • eskbanker
    eskbanker Posts: 31,066 Forumite
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    spinnin wrote: »
    In the conditions, it seems to suggest you can transfer in a help-to-buy (once), it won't affect the £4k limit for that year, and you will get the 25% balance on all.

    I also believe it is the case that you can deposit lump sums into a LISA.

    This being so, then could we continue to lodge £200 pm into the help-to-buy ISA until the end of this tax year, then transfer it across and lodge another £4k into the LISA (either throughout the year or in lump sum), to maximise the allowances? Or are there any issues with lodging to both in the same tax year?
    The ability to transfer HTB balances into LISAs without affecting the £4K annual allowance for the latter only related to the 2017/18 tax year (and only for prior year HTB contributions), so that particular exemption has now expired.

    Anything put into a LISA (including transfers, except from another LISA) now counts towards the £4K annual limit....
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Can you use LISA to Staircase on a shared ownership?

    I know you can use it for the initial share (assuming it doesn't value the home at more than 450k) - but if I buy say 50% now @ £100k, can I then staircase to 100% for another £100k (or thereabouts) in 2 years or so, using fresh LISA savings for my (re)mortgage deposit?

    I'm thinking something along the lines of:

    Current Price: £195k
    50%: £97,500
    Current LISA ~£12k

    Mortgage of £83,000~ (£15k/15% deposit due to bad credit)

    83k is within 3x salary so I'm hoping that will overlook some of the past credit issues.

    IF POSSIBLE - in say April 2020 - Take out another mortgage of say £80k to purcahse the remaining 50% (@ approx 100k). Use 2 years of LISA contributions (£4k upped to £5k x2) to pay 10k, have 10k from other cash savings.

    Obviously having 10k stuck in a LISA wouldn't be ideal if that wasn't allowed!!! Also I assume IF you can staircase with it, if I move before staircasing I'd lose it/have to leave it til 60.... so staircasing then selling would likely prove better
  • Alexland
    Alexland Posts: 9,653 Forumite
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    Somerset_La_La_La wrote: »
    Can you use LISA to Staircase on a shared ownership?

    No, because you would already own an interest in (the) property.
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