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  • FIRST POST
    • MSE Helen Saxon
    • By MSE Helen Saxon 16th Mar 16, 5:06 PM
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    MSE Helen Saxon
    Lifetime ISAs guide
    • #1
    • 16th Mar 16, 5:06 PM
    Lifetime ISAs guide 16th Mar 16 at 5:06 PM
    Hi!

    This is the discussion thread for the



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    Thanks folks,
Page 66
    • Alexland
    • By Alexland 7th Feb 18, 11:01 PM
    • 2,248 Posts
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    Alexland
    I hold both cash & HTB ISA with NW and thinking to transfer the HTB to Skipton soon. I did not make any payments to the cash ISA last year apart from the interest earned & a credit transaction on 06 April 2017 due to payment made on 05 April 2017 night. I remember the last time I checked the account I was able to see what it is my current year ISA remaining balance and if I remember correctly NW did not deduct the 06 April 2017 payment from my annual ISA allowance so hopefully it is still treated as payment made in tax year 2016-2017 (strangely when I checked the website today again I can no longer see this infor..?).

    I was just wondering in my case would there be any problem to transfer out the H2B and leave the Cash ISA active until further instructions.
    Originally posted by lpyy
    Sorry for the delay replying I fell a bit behind.

    Ok so I think you are saying you have not contributed to the Cash ISA this tax year and you believe Nationwide have treated the 5th April contribution (before midnight?) as last tax year in which case you should be fine to switch your HTB ISA to a LISA and leave your old Cash ISA behind to continue to accumulate interest.

    Alex
    • Alexland
    • By Alexland 7th Feb 18, 11:09 PM
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    Alexland
    Thank you. I spoke to Skipton to get confirmation and they said I have £2100 of my allowance left... Very confused!
    Originally posted by Kreacher
    I agree that doesn't make sense if you have contributed 10 months at £200 into the HTB and £100 to the LISA. Is there any possibility you missed a HTB contribution or your April contribution was before the 6th?? Also Skipton have probably not received the interest information from your HTB provider.
    Last edited by Alexland; 07-02-2018 at 11:20 PM.
    • Alexland
    • By Alexland 7th Feb 18, 11:14 PM
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    Alexland
    The 0.75 is low ...

    But considering people who have transferred HtB ISAs in and then maxing out this tax years 4K allowance... Such as myself ... Hypothetically, chucking another 4K in early on in the 18/19 tax year ; then 0.75% on this lump sum (say 8K minimum) soon stacks up, no ?

    I'm already trying to think ahead whether my *spare* funds would be best placed in a product like a 5% regular saver (where the max deposit is £200pcm) for another year or chucking that 2nd 4K at the LISA and earning 0.75 on the lot ASAP in the new tax year ?!?

    Any ideas
    Originally posted by NevvyC
    Yes it is better to hold the money in a better account such as the flexible 5% Nationwide products for the majority of the tax year then make the LISA contribution towards the end of the tax year. But don't leave it too late as we have already seen occasions where Skipton appear to have unexpectedly rejected contributions so leave enough time to resolve issues.

    Alex
    • Alexland
    • By Alexland 7th Feb 18, 11:18 PM
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    Alexland
    Following my post above, I noticed on the Skipton website that you can only pay into one Lifetime ISA in each tax year. As I have already paid into the Nutmeg LISA this year (albeit only £100), does this therefore mean that I would have to top it up to the max value (ie. £4,000 less contributions into HTB ISA since 5 April 2017) BEFORE transferring to the Skipton one?

    I obviously want to get this right before I start moving things around, and the Skipton deadline is fast approaching!
    Originally posted by Buckets86
    It's the same LISA you are just transfering it between providers. It probably makes more sense to top it up after both accounts have transfered as the interest earned this tax year while money is in the HTB ISA also counts towards the £4k limit.

    Alex
    • NevvyC
    • By NevvyC 8th Feb 18, 9:57 AM
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    NevvyC
    Yes it is better to hold the money in a better account such as the flexible 5% Nationwide products for the majority of the tax year then make the LISA contribution towards the end of the tax year. But don't leave it too late as we have already seen occasions where Skipton appear to have unexpectedly rejected contributions so leave enough time to resolve issues.

    Alex
    Originally posted by Alexland

    Sorry, to clarify!; this is precisely what I have been doing THIS tax year to make my money work for itself and make the 4K for the LISA therefore (albeit slightly!) easier to achieve... By adding as much as possible (up to the monthly Max deposit limit imposed of £500)

    My question (or pitch) "Any ideas " was referring to the NEXT tax year... As in, would I be better off stashing money away in a similar 5% regular saver account (with a lower monthly deposit limit of only £200pcm now...) starting from scratch at zero balance

    OR

    Utilising the BULK I will now have in my LISA (HTB transfer + LISA 4K Max + gov bonuses + 0.75% earned annually - I opened my account in June '17 so will receive that in Jun '18 ) and adding any additional funds I can spare (that would otherwise be going into the 5% reg saver product but at a capped £200pcm...) to this BULK ???


    ...

    (Normally I would have said it wouldn't matter as the 5% on 200pcm would likely outweigh 0.75%) but since the 0.75% interest will be compounding AND on the entire BULK sum in the LISA; it's hard to tell which would be the best option in the new tax year ... Just trying to get ahead of things

    Thanks in advance for any advice / wisdom imparted - it's much appreciated!
    Last edited by NevvyC; 08-02-2018 at 10:00 AM.
    • Alexland
    • By Alexland 8th Feb 18, 4:04 PM
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    Alexland
    I don't see why you wouldn't continue to contribute to the cash LISA towards the end of the tax year in future years. It makes sense if the additional interest you would receive on the earlier bonus is less than the additional interest you would gain by the money being in an alternative account. Just make sure that whatever account you are using is not locking you into a minimum period.

    ps the Nationwide regular saver is £250 per month (down from £500 per month) not £200 per month?

    Alex.
    • NevvyC
    • By NevvyC 8th Feb 18, 4:56 PM
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    NevvyC
    Oh is it ? I haven't looked into it yet that much since I'm still on the £500pcm one until it runs out (someone else mentioned to me it was £200 so was working with that figure )

    I would absolutely continue to, to earn the govt bonuses - I'm just pondering which is the best strategy to allow my money to work harder (so that at the end of the day I can get away with putting the least possible of my own hard-earned £ in the LISA to still achieve the max allowance)

    ie. would earning 0.75% compounding on the cumulative total over the course of the 18/19 tax year, earn more than £250 a month going into a 5% regular saver in increments of 250 starting from zero balance ... And therefore outweigh the 5% option (I likely couldn't afford to do both) ... The way I have been saving for THIS tax years' max 4K was putting £500pcm in my regular saver whenever I could so that it requires less 'topping up' with my own money at the end of the day.
    • NevvyC
    • By NevvyC 8th Feb 18, 5:00 PM
    • 60 Posts
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    NevvyC
    Oh sorry I may have misread the inflection of your reply ... My point being that I'm not sure which would earn the higher value of £ : the LISA (with all those juicy thousands now in, earning 0.75%, compounding) vs the Nationwide 5% reg saver (with much smaller amounts) compounding...

    Or am I looking at it in a light I can't phantom currently) whereby the 0.75% still hits on the LISA bal ; so the reg saver would just be earning 5% anyways on whatever balance and negates the 'whatever' balance that could be being invested into the LISA ... I think I had this confusion previously actually haha! Talking through it has helped me remember though
    • Kim_13
    • By Kim_13 8th Feb 18, 5:56 PM
    • 1,901 Posts
    • 2,035 Thanks
    Kim_13
    One Family have launched a S&S LISA with a choice of two funds: https://www.onefamily.com/lifetime-isa/
    Sealed Pot 11 #520 ~ /£100
    VSP 2018 #9 ~ £19.55/£180.00
    CCCC 2018 #1 ~ £20.75/£180.00

    I'm a Board Guide on the Savings and Investments , Budgeting and Bank Accounts , Credit Cards and Marriage, Relationships and Families boards which means I volunteer to help get your forum questions answered and keep the forum running smoothly. Please remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this.) Any views are mine and not the official line of MoneySavingExpert.com
    • stphnstevey
    • By stphnstevey 9th Feb 18, 7:21 AM
    • 2,767 Posts
    • 451 Thanks
    stphnstevey
    Does anyone know the rules about opening prior to 40?

    ie. if you dont, do you miss out on ever opening one?

    If you open one prior, can you open more after 40? Can you transfer after 40?
    • Ed-1
    • By Ed-1 9th Feb 18, 7:56 AM
    • 2,180 Posts
    • 1,165 Thanks
    Ed-1
    Does anyone know the rules about opening prior to 40?

    ie. if you dont, do you miss out on ever opening one?

    If you open one prior, can you open more after 40? Can you transfer after 40?
    Originally posted by stphnstevey
    You can only open one after 40 for the purpose of transferring in one you opened before 40.
    • dfbefore30
    • By dfbefore30 9th Feb 18, 8:45 AM
    • 34 Posts
    • 104 Thanks
    dfbefore30
    I opened a Skipton LISA on 6th June (I was told I was only the second person in my city to open one. That's how eager I was!). I have saved my full allowance and as soon as the account matures, I will be in a position to buy.

    My question is when can I start looking? I was thinking around March/April given that the conveyancing process can take a while, but is this too soon?
    • Alexland
    • By Alexland 9th Feb 18, 1:50 PM
    • 2,248 Posts
    • 1,634 Thanks
    Alexland
    Oh sorry I may have misread the inflection of your reply ... My point being that I'm not sure which would earn the higher value of £ : the LISA (with all those juicy thousands now in, earning 0.75%, compounding) vs the Nationwide 5% reg saver (with much smaller amounts) compounding...
    Originally posted by NevvyC
    Interest is earned by the day. It's obviously better, on any given day, to get 5% interest the 100% of the contribution than 0.75% interest on 125% of the contribution.

    As such it always makes sense to pay the LISA money in towards the end of the tax year, holding the money in much better accounts, even if it means you delay getting the 25% bonus.

    However with the regular saver it's a bit more complicated as you have the monthly limit so would need to find somewhere else to earn good interest (anything around 1% or higher would be better than the LISA with earlier bonus) on any other money you have before it can go into the regular saver.

    Alex.
    • NevvyC
    • By NevvyC 9th Feb 18, 6:53 PM
    • 60 Posts
    • 3 Thanks
    NevvyC
    Hmm, even if you whacked 4K in ASAP at the very start of the new tax year (releasing another 1K govt bonus also ASAP) meaning you'd be getting 0.75% of everything in there (including this new, latest 1K bonus...)

    Does the 5% on monthly deposits of £250 starting at zero balance still earn more in interest than the scenario above ? (where, admittedly, the interest earning power is a lot less, 4.25% less even ... But is applied on a larger amount (eg. a free 1K of capital as soon as released also powering interest) ??



    EDIT: re-reading, it seems this scenario is what you refer to (re. 5% on 100 vs 0.75% on 125) if I'm getting you correctly ...

    As for the monthly reg saver limit I'll be starting from scratch again anyway after depositing my 4K this tax-year and can likely only afford to do the £250 into the reg saver each month and always aim to get it in there on the first of the month to earn maximum potential - so wouldn't need to look at comparing any other further products and just the 2 best options keep it nice & simple (aside from that I hold my everyday funds in current accounts that pay 3% up to 1.5K and 2.5K so plenty of headroom without the need for more products at this time!)



    EDIT 2: I think my head just goes round in circles with this stuff I swear ! Haha... Another thing to consider, like you say, is the monthly reg saver cap ; so whereas you could chuck a fresh 4K in the LISA as soon as the new tax year begins (and hence release the next 1K bonus ASAP after that) - you're earning 0.75% on the lot from the get-go (compounding) whereas with the reg saver you only build it up in £250 blocks, monthly so ergo only get 5% compounding on 250 ... 500 ... 750 ... 1K etc. (which again brings my head back to the original scenario I addressed of which has the better earning potential vis-a-vis interest of these 2 strategies ???) As realistically, whilst I say I'm starting from scratch again (zero balance) with the reg saver (since its capped and that's the restrictive criterion of the account) I may still be able to juggle things so that I have a fresh 4K ready-to-go in the new tax year (like I say, for example, everyday funds up to 1.5K & 2.5K earning 3% in current accounts as well as the opportunity to sell off assets from my business if it's worth doing-so...)



    EDIT 3: I've probably answered my own predicament there (with the 3% current accounts) see what I mean about head going round & round
    Last edited by NevvyC; 09-02-2018 at 7:15 PM.
    • Alexland
    • By Alexland 9th Feb 18, 7:41 PM
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    • 1,634 Thanks
    Alexland
    I've probably answered my own predicament there (with the 3% current accounts) see what I mean about head going round & round
    Originally posted by NevvyC
    Keep it simple - on any given day you want your money in the best place to earn the best interest rate and then towards the end of the tax year you want to move it into the LISA for the 25% bonus. As long as you are getting around 1% or more you are doing better than the LISA with earlier bonus scenario.

    Yes your high interest strategy is likely to use a mix of Regular Savers and other savings accounts.

    Alex.
    Last edited by Alexland; 09-02-2018 at 7:43 PM.
    • Alexland
    • By Alexland 9th Feb 18, 7:50 PM
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    Alexland
    One Family have launched a S&S LISA with a choice of two funds: https://www.onefamily.com/lifetime-isa/
    Originally posted by Kim_13
    1% AMC and 0.3% Investment Costs is pretty unappealing - to be avoided alongside Moneybox and The Share Center. I believe that Skipton, Nutmeg, AJ Bell and HL all have a good LISA offer for different target audiences.

    Alex
    • Alexland
    • By Alexland 9th Feb 18, 7:57 PM
    • 2,248 Posts
    • 1,634 Thanks
    Alexland
    I opened a Skipton LISA on 6th June (I was told I was only the second person in my city to open one. That's how eager I was!). I have saved my full allowance and as soon as the account matures, I will be in a position to buy.

    My question is when can I start looking? I was thinking around March/April given that the conveyancing process can take a while, but is this too soon?
    Originally posted by dfbefore30
    If you are in Scotland the conveyancing process is generally quicker as some of the searches have been done upfront. Otherwise in the rest of the UK the process generally takes 2-4 months. Our current property took 5-6 months as the seller wanted to arrange the completion date around school holidays.

    The point at which you need money in the process also depends on if the seller requires a deposit upon exchange of contracts (and if you can fund this from cash without drawing on the LISA). The amount of exchange deposit is negotiable but is usually 5% to 10%.

    Don't confuse the exchange deposit (the money you agree to give the seller in advance) with the mortgage deposit (the proportion of the property you will own, that defines the LTV ratio). You will also need some cash to pay initial fees which should not come from the LISA.

    Sometimes it is possible that the seller will agree to exchange and complete on the same day at the end of the process so no exchange deposit is required. However if the seller is buying another property then their seller may require an exchange deposit so money needs passing up the chain.

    Alex.
    Last edited by Alexland; 09-02-2018 at 8:02 PM.
    • Kreacher
    • By Kreacher 10th Feb 18, 8:04 AM
    • 86 Posts
    • 167 Thanks
    Kreacher
    I agree that doesn't make sense if you have contributed 10 months at £200 into the HTB and £100 to the LISA. Is there any possibility you missed a HTB contribution or your April contribution was before the 6th?? Also Skipton have probably not received the interest information from your HTB provider.
    Originally posted by Alexland
    Hmmm, I don't know! What would happen if I transfer in £2100 and it's too much?
    Save 12K in 2017 #023 = £1345/ £6000 (22.41%)

    Save 12K in 2016 #110 = £7500/ £6000 (100%)

    20k by April 2018 = £8845/ £20000 (44%)
    • Alexland
    • By Alexland 10th Feb 18, 1:55 PM
    • 2,248 Posts
    • 1,634 Thanks
    Alexland
    Hmmm, I don't know! What would happen if I transfer in £2100 and it's too much?
    Originally posted by Kreacher
    Do you not have any records of your HTB ISA contributions? For example if you were contributing on the 1st of the month then the April contribution would be last tax year and this would all make sense.
    • Kreacher
    • By Kreacher 10th Feb 18, 3:33 PM
    • 86 Posts
    • 167 Thanks
    Kreacher
    Do you not have any records of your HTB ISA contributions? For example if you were contributing on the 1st of the month then the April contribution would be last tax year and this would all make sense.
    Originally posted by Alexland
    Yes £2100 makes sense as my contributions were the 1st of the month. It's the interest part that's confusing me as Skipton have told me I can add £2100.
    Save 12K in 2017 #023 = £1345/ £6000 (22.41%)

    Save 12K in 2016 #110 = £7500/ £6000 (100%)

    20k by April 2018 = £8845/ £20000 (44%)
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