Help to buy or Lifetime ISA
Discussion
Hey guys
Looking for a bit of financial advice. Current 24, moved back in with my folks to save money during my last couple of years of education. As such I am beginning to acrrue some savings. End goal would be to buy a flat as soon as possible post graduation. However with that being my primary plan I honestly don't know what I'm doing in life, and have been toying with looking abroad and whatnot.
As such I am really not sure what type of savings would be most suited to me, obviously the attraction to these ISAs is the government contribution to home purchases, which is my most likely goal, they also seem to benefit from relatively high interest compared to other ISAs.
Help to buy offers a £1200 lump sum initial pay on and a maximum of £200/month contribution. I believe I could afford to fully saturate this. Government will offer a 25% contribution on accounts up to £12k
Lifetime allows pay ins of any kind up to a yearly limit of £4k, with the same contribution of 25%, but with no limit. However feature a 25% charge on any early withdrawals. They also don't seem to benefit from the higher interest rates that help to buys do.
Now, in my mind I could saturate the help to buy max contributions, however I doubt i could exceed around that level, so the lower contribution limit is a non-factor. However that being said I do foresee positive financial changes in my not too distant future which could increase my saving potential. I also have enough saved currently that my initial lump could be larger than £1200.
That being said, the though of a potential 25% loss if I need access to my savings is a massive turn off to me. I'm not going to lie the thought of moving abroad for work, or simply for travel before settling down is really appealing to me but it does add some certainty to when and where I'd be making a home purchase. If I do require access to savings the lack of penalty on the help to buy is a boon.
Currently I have my savings in my current account and have been used to an element of liquidity. Really just looking for advice on the most appropriate account, and the possibility that I am overlooking something. Is there anything to look for in one of these ISA accounts over basic FSA guarantee and the highest interest rate?
Thanks
Caelite.
Looking for a bit of financial advice. Current 24, moved back in with my folks to save money during my last couple of years of education. As such I am beginning to acrrue some savings. End goal would be to buy a flat as soon as possible post graduation. However with that being my primary plan I honestly don't know what I'm doing in life, and have been toying with looking abroad and whatnot.
As such I am really not sure what type of savings would be most suited to me, obviously the attraction to these ISAs is the government contribution to home purchases, which is my most likely goal, they also seem to benefit from relatively high interest compared to other ISAs.
Help to buy offers a £1200 lump sum initial pay on and a maximum of £200/month contribution. I believe I could afford to fully saturate this. Government will offer a 25% contribution on accounts up to £12k
Lifetime allows pay ins of any kind up to a yearly limit of £4k, with the same contribution of 25%, but with no limit. However feature a 25% charge on any early withdrawals. They also don't seem to benefit from the higher interest rates that help to buys do.
Now, in my mind I could saturate the help to buy max contributions, however I doubt i could exceed around that level, so the lower contribution limit is a non-factor. However that being said I do foresee positive financial changes in my not too distant future which could increase my saving potential. I also have enough saved currently that my initial lump could be larger than £1200.
That being said, the though of a potential 25% loss if I need access to my savings is a massive turn off to me. I'm not going to lie the thought of moving abroad for work, or simply for travel before settling down is really appealing to me but it does add some certainty to when and where I'd be making a home purchase. If I do require access to savings the lack of penalty on the help to buy is a boon.
Currently I have my savings in my current account and have been used to an element of liquidity. Really just looking for advice on the most appropriate account, and the possibility that I am overlooking something. Is there anything to look for in one of these ISA accounts over basic FSA guarantee and the highest interest rate?
Thanks
Caelite.
If you’re not sure when you want to buy, I’d get the Help to Buy ISA. Just put aside £200 per month and you get a decent interest rate, security and flexibility.
If the house purchase could be very soon, it’ll help as you have to open the LISA a year before using it for that. If it will be a few years away, you’ve got time to gradually pay it up to £12k and maximum bonus.
I think it’s 2.5% interest with Barclays, so you’d get to £12k (paying in £200 on the first day each month and starting with £1200) after 51 months, if I’m still any good at maths. That’s assuming monthly interest
If the house purchase could be very soon, it’ll help as you have to open the LISA a year before using it for that. If it will be a few years away, you’ve got time to gradually pay it up to £12k and maximum bonus.
I think it’s 2.5% interest with Barclays, so you’d get to £12k (paying in £200 on the first day each month and starting with £1200) after 51 months, if I’m still any good at maths. That’s assuming monthly interest
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