Lifetime isa question.

VincentHanna said:
That's confused me even more.

Surely a deduction of 25% is 1.25?

If I was taking 20% VAT off something I would divide by 1.2
Click to expand...

With the VAT calculation you're working out how much was added on. With the penalty you're working out how much will be taken off.

The penalty is 25% of the amount withdrawn. If you withdrew £1,000 the penalty would be £250 and you'd receive £750. £1,000/1.333 = £750.
 
VincentHanna said:
Holy thread revival Batman.

I'm desperately trying to work out how much I would lose from mines and my wifes ISA's if we buy a house that's £460,000

I know it's a 25% penalty, but does that factor in money you might have initially transferred from a Help to Buy ISA?

For example - If I had £30K is it:

30,000
Divide by
1.25?

Or is it more complex than that?

Developer will only either pay our stamp duty or drop the house to £450,000, not both, so I'm trying to work out the least worst option!
Click to expand...
Funnily enough I am looking at withdrawing my LISA as well because the house I want is over 450k. I had a look around and I think how it works is you get 25% bonus, if you withdraw then you lose 25% of what your balance is as a penalty so you end up with 93.75% of what you put in.
Eg. Put in £100 * 1.25 = £125. £125*75% = £93.75

Losing 6% of what you put in is annoying, but it's not like you're losing 25% of your own money if that makes sense? The GOV take back their 1k bonus and charge you a fee for having it in there. A shame they bumped it from 20% back to 25% just a month ago!

I stupidly put in another 4k like a month ago so I will wait till that clears and get the 1k bonus then I will save a bit.
 
Surveyor said:
You do if the house is more than £450k, the maximum allowed under the LISA rules.
Click to expand...

That's a rule that didn't stand up to the test of time then.

Average house price is now around £330,000. Smallest houses and flats are over £200,000 in most of the UK now.

There's shared ownership, but that's meant to be for the poor or crippled.
 
VincentHanna said:
Holy thread revival Batman.

I'm desperately trying to work out how much I would lose from mines and my wifes ISA's if we buy a house that's £460,000

I know it's a 25% penalty, but does that factor in money you might have initially transferred from a Help to Buy ISA?

For example - If I had £30K is it:

30,000
Divide by
1.25?

Or is it more complex than that?

Developer will only either pay our stamp duty or drop the house to £450,000, not both, so I'm trying to work out the least worst option!
Click to expand...

If 30k includes the bonus you've built up over the 6 years, then yes, you'd get back 22.5k. Essentially you lose £250 of your own money for each year that you've had the bonus for.
 
BallistixOnZ490 said:
That's a rule that didn't stand up to the test of time then.

Average house price is now around £330,000. Smallest houses and flats are over £200,000 in most of the UK now.

There's shared ownership, but that's meant to be for the poor or crippled.
Click to expand...

£450k covers both your average price and small house/flat examples.
 
BallistixOnZ490 said:
That's a rule that didn't stand up to the test of time then.

Average house price is now around £330,000. Smallest houses and flats are over £200,000 in most of the UK now.

There's shared ownership, but that's meant to be for the poor or crippled.
Click to expand...

Not sure where you're getting your numbers from, but average house price last tracked in March was 256k.

The aim of the LISA was really to help those on low income/low savings onto the property ladder. If you can afford a property of 450k + then it begs the question of whether you actually need any help.
 
Semple said:
Not sure where you're getting your numbers from, but average house price last tracked in March was 256k.

The aim of the LISA was really to help those on low income/low savings onto the property ladder. If you can afford a property of 450k + then it begs the question of whether you actually need any help.
Click to expand...

Recent news article had it at 33xk, Zoopla also has it at over 300k:

https://www.zoopla.co.uk/house-prices/uk/

A property costing £450k now would have been around £300k when LISA first launched. The people that would have needed LISA to buy any such property now still can't due to how much prices have gone up.

Found the said article:

https://www.msn.com/en-gb/news/news...-the-uk-now-more-than-c2-a3330000/ar-BB1gP964

In May, house sellers were typically asking for a record £333,564, Rightmove said.

'The average asking price has jumped by £5,767, or 1.8 per cent, since the previous all-time high recorded in April.'
 
Last edited:
BallistixOnZ490 said:
That's a rule that didn't stand up to the test of time then.
Click to expand...
Totally agree. With house price inflation as it is, anyone looking to save for a property at the higher end of the limit would need to think twice about using a LISA. You could save for 5 years and by the time you have enough, said properties will have inflated over the limit and you'll be stuck. Not only will you not be able to use it anymore, but you'll lose more money than you put in! :rolleyes:

Or if you'd opened one with the intent of buying on your own.. then your circumstances change and you want to buy with a friend or partner. Can't.

Or if you just happen to live in the south east where the average house price is around £420k, yeah.. probably can't.

There's absolutely no need for the upper limit. The LISA only lets you put in £4k per year so if they were worried about rich kids rocking up with inheritance, or lottery winners or second home owners taking advantage.. well you can't.

I wanted and raved about it I'm this thread because I had to close mine when I started house hunting with my partner. I took a punt and closed it before end of April so only got the 20% penalty. I did (for the sake of it) make a formal complaint to the bank, and wrote to my MP.

The government needs to understand that if they want to pursuade people it's worthwhile saving, they need to stop inflating the housing market with daft schemes like this, and stop penalising people for simply trying to do the right thing and save hard. It does my nut.
 
Semple said:
The aim of the LISA was really to help those on low income/low savings onto the property ladder. If you can afford a property of 450k + then it begs the question of whether you actually need any help.
Click to expand...
Well when I first started saving for an ISA I was 4 years younger and had barely started my career. Never mind the last 16mths or so allowing me to save crazy amounts in lockdown. I don't necessairly need the help now but I thought I did when I was younger.

I just wish I could hand back the bonus money and take my own deposits penalty free. Circumstances change and you should be allowed to do that imo, I know they did it up until April just gone but even then I didn't really know what was going to happen.
 
Stop inflating the housing market by offering free money to people wanting to buy above £450k? Yeah... right..
 
dLockers said:
Stop inflating the housing market by offering free money to people wanting to buy above £450k? Yeah... right..
Click to expand...
Gosh you're quick tonight. No, I mean they shouldn't produce stupid schemes like this at all. It essentially means taxpayers are propping up the market, like all of their schemes.

However, seen as the scheme is available - they could have at least made it more fair and importantly - without daft penalties.

Just because someone lives in the south east, or is over 40, doesn't mean they're not a FTB that could still do with a helping hand if available. Exactly the same as someone up north, just different numbers involved.
 
Scam said:
Totally agree. With house price inflation as it is, anyone looking to save for a property at the higher end of the limit would need to think twice about using a LISA. You could save for 5 years and by the time you have enough, said properties will have inflated over the limit and you'll be stuck. Not only will you not be able to use it anymore, but you'll lose more money than you put in! :rolleyes:

Or if you'd opened one with the intent of buying on your own.. then your circumstances change and you want to buy with a friend or partner. Can't.

Or if you just happen to live in the south east where the average house price is around £420k, yeah.. probably can't.

There's absolutely no need for the upper limit. The LISA only lets you put in £4k per year so if they were worried about rich kids rocking up with inheritance, or lottery winners or second home owners taking advantage.. well you can't.

I wanted and raved about it I'm this thread because I had to close mine when I started house hunting with my partner. I took a punt and closed it before end of April so only got the 20% penalty. I did (for the sake of it) make a formal complaint to the bank, and wrote to my MP.

The government needs to understand that if they want to pursuade people it's worthwhile saving, they need to stop inflating the housing market with daft schemes like this, and stop penalising people for simply trying to do the right thing and save hard. It does my nut.
Click to expand...

I'm currently battling to prove my <£6000 of savings since April 2019 to get my income related stuff maxed out, and upper savings limit is still £16,000 for means tested benefits, good luck ever finding anywhere to live with that now.

I used the previous help to buy ISA for my shared ownership. LISA actually gets counted towards saving caps even if you can't withdraw it without loss, so its actually pretty terrible for low income people that need to claim housing benefit or anything else.
 
You must log in or register to reply here.
Back
Top Bottom