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  • FIRST POST
    • Timberflake1983
    • By Timberflake1983 12th Aug 18, 10:06 AM
    • 36Posts
    • 9Thanks
    Timberflake1983
    Help to Buy ISA and LISA
    • #1
    • 12th Aug 18, 10:06 AM
    Help to Buy ISA and LISA 12th Aug 18 at 10:06 AM
    Hi guys,

    My gf and I are saving for our first home. At the minute we both have a HTB ISA which we put 200 a month into. I was talking to a friend yesterday and she told me about the LISA she has which pays a 25% cash lump sum every year in addition to any interest.

    My question is, can I have a HTB ISA and a LISA at the same time to take full advantage of both?
Page 1
    • masonic
    • By masonic 12th Aug 18, 10:19 AM
    • 10,276 Posts
    • 7,629 Thanks
    masonic
    • #2
    • 12th Aug 18, 10:19 AM
    • #2
    • 12th Aug 18, 10:19 AM
    You can't take full advantage of both, but you can save into both and then make a penalty-free withdrawal from the LISA to use towards your house purchase. This will disqualify you from being able to apply for the HTB ISA bonus, but you can still withdraw the money saved plus interest to use as you wish.

    Or you can apply for the HTB ISA bonus for the house purchase and keep the LISA for retirement.
    • Timberflake1983
    • By Timberflake1983 12th Aug 18, 10:27 AM
    • 36 Posts
    • 9 Thanks
    Timberflake1983
    • #3
    • 12th Aug 18, 10:27 AM
    • #3
    • 12th Aug 18, 10:27 AM
    Thanks for the reply. So I can't have the bonus for both, which leaves little point having the HTB ISA at all given that there are ISA's paying a higher rate of interest so I might as well have the LISA and then move the HTB ISA into my Nationwide 5% savings account.
    • eskbanker
    • By eskbanker 12th Aug 18, 11:04 AM
    • 8,683 Posts
    • 9,894 Thanks
    eskbanker
    • #4
    • 12th Aug 18, 11:04 AM
    • #4
    • 12th Aug 18, 11:04 AM
    Thanks for the reply. So I can't have the bonus for both, which leaves little point having the HTB ISA at all given that there are ISA's paying a higher rate of interest so I might as well have the LISA and then move the HTB ISA into my Nationwide 5% savings account.
    Originally posted by Timberflake1983
    You're right in principle that LISA is generally a better bet given its higher annual contribution limit, but many in your shoes continue to run a HTB ISA (in the knowledge that they won't be claiming the bonus) because they typically pay better interest than other comparable accounts, so it's unusual if you find you can get better (readily-accessible) ISA rates than your HTB, who is it with?

    Worth bearing in mind when doing your comparisons that Nationwide's 5% saver (whether FlexDirect or regular saver) only pays that for a year - if you're looking at buying within a year then a LISA isn't the best option for you!

    Read up on the features of, and differences between, the products at:
    https://www.moneysavingexpert.com/savings/lifetime-ISAs/
    https://www.moneysavingexpert.com/savings/help-to-buy-ISA/
    • Timberflake1983
    • By Timberflake1983 12th Aug 18, 11:13 AM
    • 36 Posts
    • 9 Thanks
    Timberflake1983
    • #5
    • 12th Aug 18, 11:13 AM
    • #5
    • 12th Aug 18, 11:13 AM
    But surly I'd be better paying 250 into my Nationwide 5% savers account for a year, then re-asses in a year?
    • eskbanker
    • By eskbanker 12th Aug 18, 11:29 AM
    • 8,683 Posts
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    eskbanker
    • #6
    • 12th Aug 18, 11:29 AM
    • #6
    • 12th Aug 18, 11:29 AM
    But surly I'd be better paying 250 into my Nationwide 5% savers account for a year, then re-asses in a year?
    Originally posted by Timberflake1983
    Not necessarily - there are too many potential variables for it to be a simple yes or no.

    The advantage of the HTB is that whatever you build up in there earns interest on the full balance year after year, whereas if you pay 250 into a 5% regular saver, that would indeed be better in year one but you wouldn't then be able to earn 5% on that 3K balance in subsequent years.
    • Wildsound
    • By Wildsound 12th Aug 18, 2:32 PM
    • 229 Posts
    • 167 Thanks
    Wildsound
    • #7
    • 12th Aug 18, 2:32 PM
    • #7
    • 12th Aug 18, 2:32 PM
    The best setup that I suggest for a lot of people who are able to save fully into a HTB ISA and a LISA is to do the following:

    1) Pay into a HTB ISA at 200 per month up until you buy a house
    2) Pay into a high interest monthly saver account (e.g. Nationwide 5% 250 per month)
    3) On maturity of the high interest monthly saver in 2), dump the money + interest + any remainder into the LISA, thus benefiting from the 1,000 government bonus.
    4) Open a new monthly saver as in point 2)
    5) Repeat

    On buying a property, you would use the Lifetime ISA for the house purchase, therefore not being hit with the withdrawal penalty and therefore benefiting from the bonus. You would then close the HTB ISA, pocketing the interest (which if you're getting the highest interest rate on the market or an old account still paying better, you won't be able to get better elsewhere currently) and not being penalised apart from the fact you won't be able to claim the bonus from it.
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