I already have an ISA, what does this mean?
You can have more than one ISA, but you only get one ISA allowance.
So, when the ISA allowance increases to £20,000 next year, you could use £4,000 on a Lifetime ISA, leaving you £16,000 to be used on other ISA’s.
If you already have a Help to Buy ISA you can transfer it into the new Lifetime ISA should you so wish. Otherwise you will be able to run both products alongside each other, though you can only benefit once from the bonus towards the cost of the house.
You mentioned retirement, is it a pension?
No. This is a savings account and not a pension. You can still pay into a personal or company pension scheme and benefit from tax relief subject to the current pension tax rules.
Think of the Lifetime ISA as a product to use alongside your pension.
Are there any rules I should know about when I can use it to buy a house?
A few. The Lifetime ISA can only be used towards a deposit on a first home worth up to £450,000.
As the ISA is an individual account, if you’re buying a property with someone else, both first time buyers can use the ISA and the bonus.
You have to have been saving for at least 12 months before you can use the savings towards a home.
Can I withdraw my savings to buy other things?
Well yes you could, but you will lose all your bonus payments plus the interest that would have been earned on those savings if you do so. There may also be a possibility of costs incurred as a result of withdrawing the money.
There are only three situations in which you will be able to withdraw the savings without losing the bonuses and tax free standing of the ISA:
- You buy a first house
- You reach 60
- You are terminally ill
We don’t offer to compare Lifetime ISAs…..Not yet anyway, they don’t exist yet!
We do however compare traditional ISAs and to do so couldn’t be simpler.