Can you transfer your Help to Buy: ISA to a LISA?

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By Beehive Money

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The Help to Buy: ISA and the Lifetime ISA are often compared due to their similarities because they were both designed to give first-time buyers a bonus when they bought their first homes. But it’s a little bit like comparing apples with pears! Fruity but lots of different features.

The short answer to whether you can transfer your Help to Buy: ISA to a Lifetime ISA is yes, potentially, but not with Beehive Money. But it should be easy enough to close your Help to Buy: ISA and open a new Lifetime ISA and fund your account with your withdrawn savings if that's right for you. However, if you have more than £4,000 in your Help to Buy: ISA then it'll take more than 12 months to redeposit all of the funds into your Lifetime ISA. Plus, you won't be able to use your Lifetime ISA for 12 months once it's opened to avoid the 25% Government withdrawal fee.

The benefits of a LISA compared to a Help to Buy: ISA

As you can no longer open a new Help to Buy: ISA but you can open a Lifetime ISA we’re here to tell you about some of the benefits of the LISA.

  • The Lifetime ISA’s bonus can be put fully towards your deposit whereas with the Help to Buy: ISA bonus is only paid once you’ve completed on your house purchase, so it’ll be handy for buying a new sofa or for the decorating fund, but it doesn’t much help when it comes to saving for a deposit. You can use your savings for your deposit once the account has been closed but not the bonus.
  • You can save more each month, and, in the Lifetime ISA you can save up to £4,000 per tax year in a LISA whereas you can only save £200 a month in a Help to Buy: ISA after the first month’s max £1,200 deposit. 
  • Additionally, the maximum bonus you can receive from the Help to Buy: ISA is only £3,000 whereas if you saved for the maximum time in a Lifetime ISA the bonus you could receive would look more like £32,000 if you opened at 18 and earned the full annual bonus until you were 50.
  • The Lifetime ISA’s ceiling for the property value you can purchase using the account is also different to the Help to Buy: ISA. If you already have a Help to Buy: ISA, then you’re able to purchase a property up to £450,000 in London but only £250,000 across the rest of the UK whereas with a Lifetime ISA you can purchase a property up to £450,000 across the whole country.

Of course, there are some things to consider with both accounts. With the Help to Buy: ISA you can use the funds for your deposit once you have £1,600 which could be within 3 months at the earliest. But, with the Lifetime ISA you’ll have to have the account open for 12 months to use your savings and bonus otherwise you’ll be charged a 25% government withdrawal fee. You’ll also be charged this withdrawal fee if you try to use your savings for anything other than a house purchase or for retirement at age 60 meaning you could end up with less than you put in.

Wondering how much you’ll save in the next few years with a LISA? You can work out how much you could possibly save by using our handy Lifetime ISA calculator.

Cashing out your Help to Buy: ISA

Withdrawing from your Help to Buy: ISA should be simple. If you want to withdraw and keep the account open, you should be able to do this in your provider’s online banking or by contacting them. If you want to close your account, contact your provider directly and if you want to use your account for your first home purchase and not a Lifetime ISA then speak to your solicitors when you’re going through the conveyancing process. 

Reviewing your savings

We always want the best for our members, which is why we recommend that you should regularly review any savings you have; either with us or elsewhere. Ensure that you're still getting competitive rates (where you aren't locked into a fixed term product) and that your accounts continue to help you reach your savings goals. 

See our full range of savings accounts, compare interest rates and find the right product for you.

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Can I take money out of my Help to Buy: ISA? 

You'll be able to withdraw from your Help to Buy: ISA without penalty, but you won’t be able to pay in again in the same month. For example, if you’ve paid in £200 and withdrawn £100 you can’t pay back £100 later in the same month with many providers.

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