Which ISA is better: Help to buy or lifetime?
In our view Lifetime offers greater flexibility as it offers the opportunity for higher contributions AND you can save for retirement if your property purchase plans go astray. The chart below compares your options.
|HELP TO BUY ISA
|How much can you save?||£4,000/yr||£2,400/yr (£3,400 in year one)|
|Can you put lump sums in?||Yes||No, you need to save monthly|
|What’s the max bonus?||£32,000 (assumes max contribution over 32 years)||£3,000|
|When’s the bonus paid?||Annually (thus you get interest on the bonus once it’s paid)||When you buy a home (so no interest on the bonus)|
|Can you invest as well as save?||Yes, with cash & shares Lifetime ISAs||No. Cash only|
|What’s the max property price?||£450,000||£250,000 (£450k in London)|
|When can you use it to buy a home?||After the ISA has been open 12mths||Once you’ve £1,600+ saved (which can be done in three months)|
|Who can open it?||Anyone aged 18 to 39||Any first-time buyer aged 16+|
|Can I withdraw money if not buying a house?||Yes for retirement, but if earlier you won’t get bonus and may pay a penalty (still being consulted on)||Yes at any time, you just don’t get bonus|