Lifetime ISAs guide

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  • Edinburghsaver
    Edinburghsaver Posts: 21 Forumite
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    Hi all,

    Apologies for cross-posting here and on the house buying board - I'm confused!

    I started a HtB ISA which I transferred to a LISA last financial year to get the bonus - I have maxed my contributions this year and now have £15k sitting in the account.

    I'm looking to buy in Edinburgh, where an 'offers over' system is used. Say I've seen a property and the home report values it at £130k. This is the figure the bank uses for the mortgage valuation, which means a 10% deposit to the bank would be £13k.

    However, similar properties on the street have sold for £140k and I'd likely need to offer around this amount in order to be successful. That's £10k on top of the £13k I need to pay to the bank. The total capital I need is £23k.

    Can the additional £10k required to bid over the home report value come from my Lifetime ISA, or must this come from a separate account?

    This is important, as if I can use funds from the LISA to pay the offers over amount, I will add another £4k to my LISA in April and get the government bonus. Otherwise, I'll need to save all £10k myself.

    I don't yet have a conveyancing solicitor yet or I would ask them, so just wondering if anyone here has been through the process in Scotland.
  • masonic
    masonic Posts: 23,278 Forumite
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    The bank will decide what they will lend you based on what they think the property is worth. It is entirely up to you how you fund the difference, all of it can come from your LISA if you have sufficient funds within it.
  • benjie92
    benjie92 Posts: 3 Newbie
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    If I put £4,000 in a Lifetime ISA now would I still get the £1,000 bonus in April even though its only been in for 2 months?

    Or would it be better to open a Lifetime ISA at the start of the new tax year??

    Thanks!!
  • eskbanker
    eskbanker Posts: 31,076 Forumite
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    benjie92 wrote: »
    If I put £4,000 in a Lifetime ISA now would I still get the £1,000 bonus in April even though its only been in for 2 months?

    Or would it be better to open a Lifetime ISA at the start of the new tax year??

    Thanks!!
    LISA bonuses are always paid about 4 to 8 weeks after any contribution, they're not dependent on money being in the account for a certain length of time, or changes of tax years....
  • Zorillo
    Zorillo Posts: 774 Forumite
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    benjie92 wrote: »
    If I put £4,000 in a Lifetime ISA now would I still get the £1,000 bonus in April even though its only been in for 2 months?

    Or would it be better to open a Lifetime ISA at the start of the new tax year??

    Thanks!!
    It would be better to open one now and put in £4k and get £1k bonus, and then deposit another £4k in the new tax year and get a second £1k bonus :)
  • [Deleted User]
    [Deleted User] Posts: 0 Newbie
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    Hi,

    I have a few questions about the LISA when there's more than one person involved:

    1) If say, one person already owns a property, but the other person doesn't but has a LISA already. If they applied for a joint mortgage together, can they still purchase a property and receive the LISA bonus for the person who has the LISA? And in this case, does the status of other person who already has a property affect the amount of stamp duty required for the exchange?

    2) If a couple is recently married, and one of the two is from abroad (so was not a British Citizen initially), can the spouse who migrated to the UK still apply for a LISA with the intention of saving for a house? Or what would be required in order for them to be eligible?
  • bowlhead99
    bowlhead99 Posts: 12,295 Forumite
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    GP0717 wrote: »

    1) If say, one person already owns a property, but the other person doesn't but has a LISA already. If they applied for a joint mortgage together, can they still purchase a property and receive the LISA bonus for the person who has the LISA?
    Yes: if the person who has the LISA withdraws ome or all of their money (including bonus) from the LISA for a qualifying purpose (e.g. buying their first property) and the property qualifies (total value of the jointly owned property is below the value limit etc) then they should not need to pay a penalty.
    And in this case, does the status of other person who already has a property affect the amount of stamp duty required for the exchange?
    This follows the normal stamp duty rules and isn't anything to do with whether or not an ISA or LISA is used.
    2) If a couple is recently married, and one of the two is from abroad (so was not a British Citizen initially), can the spouse who migrated to the UK still apply for a LISA with the intention of saving for a house? Or what would be required in order for them to be eligible?
    Ability to open a LISA is not citizenship based. You just need to be a UK tax resident meeting the age or other criteria.

    If they intend to use the LISA money for buying a property rather than for investing for retirement, it will be important that they have not already been an owner of residential property anywhere else in the world.
  • Sibs_90
    Sibs_90 Posts: 1 Newbie
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    Hi all,

    This is my 1st post (hopefully it's in the right place).

    So.....Me and my wife signed up for a LISA to help buy our 1st house, and we were telling her parents (my in laws) all about it, and it's benefits e.c.t. It was then, her dad reaveled to her that he put her name down as owning a 3rd of a share on his house he has in Malaysia. He said he put her name down when she was 5 years old and she didn't even know!

    In terms of the LISA, would she still be unable to use it towards our first house?

    I called Newcastle Building Society (our LISA provider), who didn't seem 100% confident or comfortable giving advice, but did sign post me to get in touch with the HMRC to serif they have any rules around that.

    I just thought I'd touch base here and get opinions 1st before calling them.

    What do you guys think?

    Regards,

    Paul
  • masonic
    masonic Posts: 23,278 Forumite
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    From what you've said she wouldn't be eligible and would be subject to the penalty if she withdrew the money, but it is worth exploring further to confirm she is definitely registered as owning a share of the property.
  • Alexland
    Alexland Posts: 9,653 Forumite
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    If she didn't know about it there is a good chance HMRC will never find out and join the dots but yes as masonic says she would not be eligible for a penalty free withdrawal to use towards a property purchase and she would need to make a declaration of FTB status. I guess she could have truthfully done that if she didn't now know.

    She could still transfer to a S&S LISA and invest for retirement.

    Alex
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