Lifetime ISAs guide

NevvyC wrote: »

So do the bank pay the seller a proportion of the value of the property in this instance then (if an exchange deposit isn't required...?) Otherwise where are they seeing (deposit) money from (if the LISA can be used for either, and for example, you follow that practice of exchanging and completing on the same day... And the LISA is working towards the mortgage (deposit?) to decrease the LTV ratio as you previously mentioned... Where are the sellers seeing £ from ?)

Just finding it all a little confusing at this stage - obviously, having never purchased a property myself; thanks for any insight and apologies if my questions seem trivial!

If no exchange deposit is required then it's nice and simple. Your lender will send your solicitor the amount your have arranged from the mortgage. You will have already asked the solicitor to draw upon the LISA and probably given them some extra money to cover the difference and fees.

Your solicitor will collect all this money together in a client account and send the seller the agreed purchase price in one transaction.

If there is any leftover money (e.g. because there is a final LISA interest payment upon closure) then this would be returned by the solicitor from the contribution you made. Solicitors might ask Skipton for a forecast account closure balance based on a proposed closure date to avoid there being any leftover money to return to you.

Your mortgage deposit is essentially the proportion of the property you end up owning at the end of the transaction - the property price minus the initial mortgage value.

If your solicitor has given an exchange deposit (say 5% to 10%) from your LISA or your other savings to the seller in advance then they will obviously pay them less on the day of completion. Obviously the exchange deposit cannot come from the mortgage as you have not yet acquired the property for the bank to secure the lending.

Alex.

JamSave wrote: »

I opened a H2B ISA with Halifax in December 2015 and have paid money in every month. I am now looking at transferring my H2B ISA to a Lifetime ISA with Skipton. From what I understand I can transfer what I had saved up until 5th April 2017 (£4499.06). Interest was paid in December but does the interest as of the 5th April also count towards the transfer? Because I have continued the £200 a month in to my H2B ISA does that mean I am also able to add a further £2000 for this years tax contribution in my Lifetime ISA, so long as I no longer pay in to my H2B ISA.

You can transfer the entire HTB ISA balance into the LISA but any contributions you have made since 6th April or interest earned since 6th April will reduce the £4k you can contribute this tax year. If you are still with Halifax then I suggest you ask them what proportion of the December interest payment was earned in this tax year. Also remember they will probably make an additional interest payment on account closure which again would count as this tax year.

Personally I think Skipton are storing up trouble by not being clear on getting this information from the old provider during the transfer process.

Alex

JamSave wrote: »

Trying to get my head around this. Does that mean if I transfer the balance as of 5th April I could then add upto £4000 more into my LISA? Or because I have continued to contribute to my HTB it will reduce what I can add.

I'm just trying to work out if I should transfer all of it or if it would be better to transfer upto 5April and continue to gain interest on the remainder left in the H2B.

Please help...

Pretty much.

As Alex said:

You can transfer the entire HTB ISA balance into the LISA but any contributions you have made since 6th April or interest earned since 6th April will reduce the £4k you can contribute this tax year.

I transferred my Help to Buy ISA and that included this years allowance (let's say £2,000). That means I can only add £2000 into my Lifetime ISA this tax year as that equals £4,000.

You just have to be wary as apparently any interest earned in this tax year will also count towards the £4000 limit.

I would check with your provider, some ISA's have to be transferred in full as they don't allow partial transfers out.

Hi, lurker here that just can't get her head around whether its too risky to 'lock' £4k savings away in this years cash LISA for over 20 years, that could be earning 3% a year elsewhere (over various accounts / drip feeding to regular savers)?

Wouldn't £4k growing at a saving rate of 3% have a higher balance after 11 years (or 13 years at 2.5%) than the cash LISA £4k + 25% bonus with interest at 0.75%, but without the withdrawal penalties if i'm estimating correctly?
I know there isn't any fixed savings rates for that period.

Maybe I'm miscalculating or over worrying, as no one has a crystal ball. I just wondered if it really is a poor option for long term savings (up until you've exhausted all the decent saving rates).

I just can't settle on transferring in my pre-Apr 2017 H2B ISA and contribute up to 4k this year, to hopefully access the bonus in a year or so, while running the risk of 'locking' away for 20 years if I don't.

I'd love to buy a house one day, and use a LISA or H2B ISA for that purpose in a couple of years - but there's also a chance I won't - and the withdrawal penalty on money that is doing little in the short term is very unattractive (and must be great for the provider). Hopefully, someone will offer a new cash LISA with a better rate to transfer to but it doesn't work that way :rotfl:

Hypothetically too, for long term savers in a cash LISA rather than a pension, eventually (with max cash contributions each year, presuming no other product has come along to partially transfer to), would this not start exceeding the FSCS guarantee (at about 17 years)? I can't imagine ever saving this but wondered why it hadn't come up.

Thanks in advance - the forum is so helpful.