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  • FIRST POST
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 9th Nov 18, 11:54 PM
    • 208Posts
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    NurseMoneySaver1122
    Saving in Lifetime ISA and Help to Buy
    • #1
    • 9th Nov 18, 11:54 PM
    Saving in Lifetime ISA and Help to Buy 9th Nov 18 at 11:54 PM
    Hi

    My partner and I are about to open a LISA (me) and a Help to Buy (partner)...I am a first time buyer, he is not.

    I understand the the difference between the two, including the fact I can save more in the LISA (£4000/year) than my partner can in the H2B (£1200 in first month then £200/month). And I can put whatever I want each month into the LISA (more some months than others) whereas partner can only put £200 max per month in and canít Ďtop upí one month just because he didnít put in the maximum £200 the month before.

    In an ideal scenario, my partner and I will be Ďmaxing outí our contribution so we get the maximum interest possible in both ISAís.
    However, my question is how best to distribute our monthly savings if we cannot input the maximum each month into both ISAís?

    Interest wise, would we be better distributing our available savings evenly between the two, or maxing one out and leaving the other that month, or does it make no difference at all By the end of the year?


    My second question is regarding the stipulation on the Help to Buy ISA that it can be used on any property costing under £250,000.

    Now the LISA doesnít have that stipulation, but I assume if we are using both the LISA and H2B ISA together to buy a home, then that locks us both in to that stipulation?? I apologise in advance if some deem this a stupid question!!!
Page 1
    • eskbanker
    • By eskbanker 10th Nov 18, 1:02 AM
    • 8,443 Posts
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    eskbanker
    • #2
    • 10th Nov 18, 1:02 AM
    • #2
    • 10th Nov 18, 1:02 AM
    My partner and I are about to open a LISA (me) and a Help to Buy (partner)...I am a first time buyer, he is not.
    Originally posted by NurseMoneySaver1122
    If he is not a first time buyer then he isn't eligible to open a Help to Buy ISA. He also wouldn't be able to use a LISA for a property purchase without incurring the withdrawal penalty that would (more than) wipe out any benefit of using a LISA in the first place.

    As you're the only first time buyer between the two of you then it probably does make sense for you to open a LISA though, as long as you're not planning to buy within the next year. Its property value cap is the more generous £450K anywhere in the country.
    • masonic
    • By masonic 10th Nov 18, 8:26 AM
    • 10,135 Posts
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    masonic
    • #3
    • 10th Nov 18, 8:26 AM
    • #3
    • 10th Nov 18, 8:26 AM
    You can hold both a LISA and HTB ISA in your name. The best approach would be use a penalty free withdrawal from the LISA towards the property purchase and just withdraw the HTB ISA money without claiming the bonus (you can't use bonuses from both LISA and HTB ISA). So the HTB ISA is just used as a high interest rate ISA for any money that can't be put in the LISA, or a higher paying (after tax) account like a high interest current account of regular saver.

    Your partner would need to stick to the high interest current accounts and regular savers for the money he saves.
    Last edited by masonic; 10-11-2018 at 8:30 AM.
    • Wildsound
    • By Wildsound 10th Nov 18, 9:54 AM
    • 209 Posts
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    Wildsound
    • #4
    • 10th Nov 18, 9:54 AM
    • #4
    • 10th Nov 18, 9:54 AM
    If your partner is not a first time buyer but is currently using a HTB ISA, I strongly suggest he reverses this position ASAP before HMRC catch up on it and create your partner a severe problem.

    As said above, you can have both open yourself, use the LISA for the purchase and just close down the HTB ISA, pocketing the interest.

    The HTB ISA was the first product which came out of this nature and is quite restrictive in the amount you can save into it, the choice of product and also the value of the property outside of London (up to £450k inside London, £250k outside). The LISA allows a greater choice of product and the value of the property can be up to £450k anywhere in the country.
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 10th Nov 18, 5:48 PM
    • 208 Posts
    • 12 Thanks
    NurseMoneySaver1122
    • #5
    • 10th Nov 18, 5:48 PM
    • #5
    • 10th Nov 18, 5:48 PM
    You can hold both a LISA and HTB ISA in your name. The best approach would be use a penalty free withdrawal from the LISA towards the property purchase and just withdraw the HTB ISA money without claiming the bonus (you can't use bonuses from both LISA and HTB ISA). So the HTB ISA is just used as a high interest rate ISA for any money that can't be put in the LISA, or a higher paying (after tax) account like a high interest current account of regular saver.

    Your partner would need to stick to the high interest current accounts and regular savers for the money he saves.
    Originally posted by masonic
    So if i opened both, maxed out the LISA and still had money left to save each month and I therefore also opened a HTB ISA, is that the best way to save 'extra money'? What I mean is, does the interest rate offered by the HTB ISA beat any other ISA's/high interest savings accounts?

    Only really aware of their benefits of government contributions if using to buy a house.
    Last edited by NurseMoneySaver1122; 10-11-2018 at 5:59 PM. Reason: Bold
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 10th Nov 18, 5:54 PM
    • 208 Posts
    • 12 Thanks
    NurseMoneySaver1122
    • #6
    • 10th Nov 18, 5:54 PM
    • #6
    • 10th Nov 18, 5:54 PM
    Another question, and please don't shoot me down for asking this...

    Could you ever be considered a first time buyer AGAIN? (I realise how silly this sounds!)

    I only ask as my partner got a mortgage with his ex when he was maybe 22 years old, more than 15 years ago, and they only had the mortgage around 6 months before separating and selling up. No money was made, if anything, the opposite, debt!

    So it's just frustrating that he's effectively in the exact same boat as me, doesn't own a home, has not benefited financially from previously buying a home, and wanting to save for a deposit for a home now.

    I know it's a wishful (and probably highly unrealistic) question. But I've asked so I'm prepared for the answers lol
    • masonic
    • By masonic 10th Nov 18, 6:43 PM
    • 10,135 Posts
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    masonic
    • #7
    • 10th Nov 18, 6:43 PM
    • #7
    • 10th Nov 18, 6:43 PM
    So if i opened both, maxed out the LISA and still had money left to save each month and I therefore also opened a HTB ISA, is that the best way to save 'extra money'? What I mean is, does the interest rate offered by the HTB ISA beat any other ISA's/high interest savings accounts?

    Only really aware of their benefits of government contributions if using to buy a house.
    Originally posted by NurseMoneySaver1122
    The best HTB ISA rates beat other equivalent products. The exceptions are high interest current accounts and regular saver accounts paying 3-5% with instant access. I hold a HTB ISA paying 2.5%, which I won't use for its intended purpose (i.e. claiming the Government bonus), but it's the best rate I can get after the aforementioned accounts.

    Another question, and please don't shoot me down for asking this...

    Could you ever be considered a first time buyer AGAIN? (I realise how silly this sounds!)

    I only ask as my partner got a mortgage with his ex when he was maybe 22 years old, more than 15 years ago, and they only had the mortgage around 6 months before separating and selling up. No money was made, if anything, the opposite, debt!

    So it's just frustrating that he's effectively in the exact same boat as me, doesn't own a home, has not benefited financially from previously buying a home, and wanting to save for a deposit for a home now.

    I know it's a wishful (and probably highly unrealistic) question. But I've asked so I'm prepared for the answers lol
    Originally posted by NurseMoneySaver1122
    Do you believe in reincarnation? That's the only exception I can think of.
    • Alexland
    • By Alexland 10th Nov 18, 6:47 PM
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    Alexland
    • #8
    • 10th Nov 18, 6:47 PM
    • #8
    • 10th Nov 18, 6:47 PM
    HTB ISAs tend to have better rates that most savings and Cash ISA accounts mostly as the provider is often keen to get you as a customer in the hope you get your mortgage from them. The very best interest rates come from the linked 5% Regular Saver accounts with current accounts from Nationwide, HSBC, First Direct and M&S Bank.

    In terms of a HTB ISA and LISA if you have ever owned property you are no longer a FTBer. Mortgage lenders will generally treat someone without a mortgage as a FTBer as the administration of the new loan is the same for them either way.

    Alex.
    • xylophone
    • By xylophone 10th Nov 18, 7:15 PM
    • 27,343 Posts
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    xylophone
    • #9
    • 10th Nov 18, 7:15 PM
    • #9
    • 10th Nov 18, 7:15 PM
    Have you /partner ever had a Nationwide Flexdirect Current Account?

    https://www.nationwide.co.uk/products/current-accounts/flexdirect/features-and-benefits

    There is also the regular saver.
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 12th Nov 18, 12:35 AM
    • 208 Posts
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    NurseMoneySaver1122
    So it's obviously best for me to open a LISA for it's intended purpose.

    But for any additional money we have, it sounds like we are better opening one of these regular savers accounts, as opposed to me opening a H2B ISA.

    Have I understood you all right?


    Oh sorry, ANOTHER question.

    The LISA interest is applied monthly. So if I'm evenly spreading what I save, I would aim to save £333.33pm. However, if I paid less once month and made up for it the next, or even if I deposited £2000 in month 1 and then another £2000 in month 6, for example, would this make any difference to the total interest at the end of the year?

    In other words, would I always end up with £1000 government contribution at the end of the year, regardless of which method above I use to save (assuming I deposit a total of £4000)?
    Last edited by NurseMoneySaver1122; 12-11-2018 at 12:44 AM. Reason: Additional question
    • eskbanker
    • By eskbanker 12th Nov 18, 1:20 AM
    • 8,443 Posts
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    eskbanker
    So it's obviously best for me to open a LISA for it's intended purpose.

    But for any additional money we have, it sounds like we are better opening one of these regular savers accounts, as opposed to me opening a H2B ISA.

    Have I understood you all right?
    Originally posted by NurseMoneySaver1122
    You can do either (or both), compare best interest rates and other relevant info at:

    https://www.moneysavingexpert.com/savings/help-to-buy-ISA/#bestbuys
    https://www.moneysavingexpert.com/savings/best-regular-savings-accounts/

    The LISA interest is applied monthly. So if I'm evenly spreading what I save, I would aim to save £333.33pm. However, if I paid less once month and made up for it the next, or even if I deposited £2000 in month 1 and then another £2000 in month 6, for example, would this make any difference to the total interest at the end of the year?

    In other words, would I always end up with £1000 government contribution at the end of the year, regardless of which method above I use to save (assuming I deposit a total of £4000)?
    Originally posted by NurseMoneySaver1122
    I think you're mixing up interest and bonuses here - interest will typically be paid annually but calculated daily, so phasing of payments will influence total interest earned.

    However, the (separate) government bonus at 25% outweighs the interest (of typically circa 1%) considerably, and isn't dependent on phasing, so yes, however you pay in £4K over a tax year you'll still receive total bonuses of £1K.

    At the risk of causing more confusion, it's perhaps worth noting that because the LISA interest is poor, relative to HTB ISAs and regular savers and even some easy access accounts, many on here keep their savings in more generous accounts during the tax year and only pay into a LISA just before the end of the tax year, thereby still obtaining maximum bonus while also optimising interest....
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 12th Nov 18, 10:25 PM
    • 208 Posts
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    NurseMoneySaver1122
    So after all your help here, I've gone away and done some more research on how best to save, and this is what I've come up with...

    1) Open First Direct 1st Account - in order to get their 5% Regular Savers Account.

    2) Open Nationwide Flex Direct 5% interest - use this for wages to be paid into and to store existing £1500 savings (of which I need possible access to).

    3) Pay maximum £300pm deposit from Nationwide into 1st Account, then onto the Regular Savers Account (as required by First Direct), for 12 months.

    4) At the end of 12 months, move £3600 + 5% interest (approx. £97) earned from Regular Savers Account into a LISA in one lump sum, and top it up to £4000 to maximise government contribution.

    As Nationwide requires you to pay in £1000pm, as does First Direct 1st Account (after 6 months, to avoid a £10pm fee), I'll be bouncing money around to cover this...assuming both accounts allow for you to do this.

    Hoping this makes sense, not just in my head!

    If anyone sees a major flaw in my method, or knows of a better way that I'm totally missing, please do let me know.

    I'm a complete novice, and so I welcome all your excellent advice...you've all been so helpful already, so thank you!!!
    • Alexland
    • By Alexland 12th Nov 18, 10:44 PM
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    Alexland
    But don't you want to get the first £4k contributed before the end of this tax year on 5th April 2019 to benefit from this year's £1k bonus?

    If you put the money into 12 month regular savers and wait until maturity (although the Nationwide one does allow penalty free early access) you will waste a year of bonus.

    Alex
    • NurseMoneySaver1122
    • By NurseMoneySaver1122 12th Nov 18, 11:41 PM
    • 208 Posts
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    NurseMoneySaver1122
    I wouldn't have £4000 by April.

    So I'm assuming, by your question, that the LISA is April to April, so regardless of when I open it, I only have until the following April to put into it to get that years bonus?

    If that's the case, maybe for the remainder of this tax year, it makes more sense for me to put the money straight into a LISA. But then from April 2019, start my method above??
    • masonic
    • By masonic 13th Nov 18, 7:18 AM
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    masonic
    I wouldn't have £4000 by April.

    So I'm assuming, by your question, that the LISA is April to April, so regardless of when I open it, I only have until the following April to put into it to get that years bonus?

    If that's the case, maybe for the remainder of this tax year, it makes more sense for me to put the money straight into a LISA. But then from April 2019, start my method above??
    Originally posted by NurseMoneySaver1122
    Yes, you can contribute to the LISA at any point during the tax year, and given the low rate of interest, it would be best to do so late in the tax year.

    It would be best to start the regular saver in March 2019, so that it can mature before the end of the next tax year and leave you time to transfer money into your LISA. Up to that point you could keep your money in the Nationwide Flex Direct and fill the LISA in late March/early April.
    • Alexland
    • By Alexland 13th Nov 18, 8:09 AM
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    Alexland
    You can contribute up to £4k per tax year which starts 6th April each year. If going down the LISA strategy it is worth trying to hit this target each tax year for maximum bonus.

    Appreciate it's going to be hard to find £4k with circa 5 months left this tax year but thinking creatively and reducing your costs it may be possible?

    I take calculated risks to fill our ISAs each year which have included Zopa flexible loans and 0% credit cards although that is a bit risky and each year it gets harder...

    Alex
    Last edited by Alexland; 13-11-2018 at 8:48 AM.
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