LISA Withdrawal Charge

bacond · 9 October 2018 at 8:37PM

I’m currently going through a flat purchase as a first time buyer with completion due at the end of October 2018 but I have got stung by the LISA withdrawal charge. The maturity date when I can use it isn’t until Feb 2019. I wasn’t aware that the effective start date of the LISA was the date you make your first payment into it, I had thought it was when I opened the account. Partly my own naivety and not being told when I set this up.

I was just wondering if anyone had a similar issue and if it would still be possible to get the funds with the government bonus at the maturity date with the money covered in the interim by a gift/loan from a family member?
Thanks

Alexland · 9 October 2018 at 9:06PM

Sadly the LISA money can only be drawn by the solicitor without penalty for a qualifying property purchase 12 months after the initial deposit. Even if you had a loan then you would not be able to draw the money yourself after the property purchase without penalty until age 60.

If you transferred an old HTB ISA into the LISA then remember your solicitor can claim the HTB ISA bonus on a qualifying property purchase based on the HTB ISA closure statement value for the next 12 months.

Out of interest which provider allowed you to open a LISA account without making an initial deposit? Seems very unusual.

Alex

bacond · 9 October 2018 at 9:42PM

Hi,

Thanks for the info regarding the HtB ISA, I'll follow that up in the hope of trying to recoup some of the potential loses.

The account was with Skipton.

Alexland · 9 October 2018 at 9:53PM

bacond wrote: »

The account was with Skipton.

I thought Skipton required an initial deposit of £1 to open a LISA account or did you somehow get past that by telling them you would transfer in a HTB ISA?

If you are going to ask you solicitor to claim a bonus using the HTB ISA closure statement then remember the property would need to qualify under the HTB ISA rules.

Alex

bacond · 9 October 2018 at 9:56PM

I had intended to transfer in at a later date, but this wasn't done till several months later. Looking at the T&C's of the account it should have been closed after 30 days if no payment was made.

Alexland · 9 October 2018 at 9:59PM

bacond wrote: »

I had intended to transfer in at a later date, but this wasn't done till several months later. Looking at the T&C's of the account it should have been closed after 30 days if no payment was made.

Interesting in which case it's worth investigating the HTB ISA bonus route. I have suggested it to several others in a similar situation and they have been successful in claiming their HTB ISA bonuses after transfering to a LISA.

If you can afford to, rather than withdrawing the LISA money and paying the penalty, consider transfering it to a S&S LISA provider (such as AJ Bell) and investing the money until retirement. That way you get a 'double dip' on the bonus.

Alex

LISA Withdrawal Charge

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