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Help to buy ISA


Van Lady

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My daughter has asked me about help to buy ISA. I’m doubtful it will be useful to her due to my mistrust of government schemes regarding house purchases. She’s mid twenties.

I’d be very grateful if someone could post a simple explanation of the help to buy ISA and advantages/disadvantages.

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I think the LISA is a better product if she's saving for a deposit. The bonus is £1 for every £4, and the money is available at the beginning, not the end, of the house purchase transaction.

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17 hours ago, Van Lady said:

My daughter has asked me about help to buy ISA. I’m doubtful it will be useful to her due to my mistrust of government schemes regarding house purchases. She’s mid twenties.

I’d be very grateful if someone could post a simple explanation of the help to buy ISA and advantages/disadvantages.

 

6 minutes ago, Frank Hovis said:

@JoeDavola You have one of these don't you?  Bit of advice wanted by Van Lady.

You can put 200 a month into a Help to Buy ISA, and they give you I believe an extra 25% when you buy a house.

I took one out the month they were released, which was several years ago, and have been paying in since. You can still 'get at' the money but you'll lose your 25% bonus.

So your daughter might as well take one out, as she'll probably want to buy a house at some point. There's no risk in doing so IMO.

They are not to be mixed up with the LISA or Lifetime ISA, where you can put in 4K every year and the government adds 1K. I have one of these but probably won't be continuing because of the risk of the government changing the goalposts when it comes to the retirement age one can start spending this money. Originally I'd planned to max out the 4k LISA limit every year with money that's already in the bank i.e. had already 'been through' the tax system to get my tax back!

EDIT: what's worth noting is that the LISA didn't exist until a couple of years after the HTB ISA was released, so I already had a few grand in my HTB by then. Perhaps nowadays the LISA is indeed the better opportunity to save more quickly for a house and get a better deposit since you can fire in 4K per year - I'd always just thought of a LISA as a retirement savings mechanism since I already had my HTB ISA.

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I’ve had mine since April 2016. It counts as a cash ISA and you can only pay into one cash ISA in a tax year and I’d already paid into one the tax year they launched.

I’ve paid in the maximum since which is £1,200 in the first month and £200 each month after. So I have around £10k in there at present and it’s paying interest of 4.25%, which is nice :)

I’d definitely open one. They currently pay far more interest than a cash ISA. I think LISA’s are better for obtaining the government bonus, but you can have both. So if you can afford it pay into both.

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I think the LISA is a better choice than the HTB ISA and  I'm maxing out a LISA each year. The 25% bonus is great.

The only thing is that there may not be that many providers willing to offer a LISA, because the government have hinted at scrapping it. Providers can't be arsed to go through all of the compliance stuff only to scrap it later and have to work out some way to deal with  these customers. @JoeDavola mentions pension age goalposts moving but I suspect the tories will scrap the LISA and allow it to be converted / repaired in to a normal ISA if they do so. 

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