Should I transfer my Help to Buy into a LISA?

thecrimson87 · 6 September 2019 at 10:52AM

Hi everyone,

I have a Help To Buy ISA with Barclays that pays around 2% interest and has been running for the past 2 years. I have been doing some reading on here and was wondering whether I would be better off moving it over to a LISA?

From what I can see the interest rates are lower on the LISAs plus none of the big banks seem to offer them, however I also see that the savings allowance is higher, as is the threshold for the property value.

I am not planning to buy within the next year so that particular condition of the LISA is not a concern for me

My main question is would I lose anything by making the switch?

Appreciate any advice

eskbanker · 6 September 2019 at 11:16AM

Apart from what you've already noted, another downside to the LISA is that should your plans change for whatever reason, withdrawals (before age 60) incur a 25% penalty if they're not used for a first-time property purchase.

Best bet would be to open a LISA anyway to get the 12-month clock ticking, fund it with a token quid, and if it still looks like a good idea towards the end of the tax year, shift up to £4K of your HTB money over at that stage, i.e. you can keep your options open for now.

thecrimson87 · 6 September 2019 at 5:25PM

Thanks, in terms of the bonus does it work about the same as I know the HTB is paid at the end and the LISA monthly? I just don't want to move the money and lose out overall.

Interest-wise Moneybox offer 1.4% compared to the 2.3% I am currently on with Barclays

Alexland · 6 September 2019 at 6:36PM

The higher LISA annual allowance is slightly offset by the time it would take to re-wrap the HTB ISA money into a LISA. It would take a few years to be ahead on how much you could have contributed if you had just continued with the HTB ISA. The main LISA advantage for a first time buyer is the higher property price limit outside London.

It's small but one other point of difference is that with a HTB ISA you get a bonus on the final balance including the accumulated interest compared to the LISA where the bonus is on the contribution only.

Alex

Should I transfer my Help to Buy into a LISA?

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