The great news is that you can open a Lifetime ISA with Tembo, even if you already have a Help to Buy ISA elsewhere. Whilst we can’t give you financial advice on which ISA product is best for you, we can list some of the differences between the products for you.
- Help to Buy ISAs closed to new applicants on 30 November 2019 - so for those who don’t already have one, a Lifetime ISA is probably the best alternative
- A Help to Buy ISA can be used for just that purpose - buying your first home, whereas a Lifetime ISA can be used to buy your first home or as a retirement savings account. This is good to note in case you change your mind about buying a house in the future
- You can have both types of account open so if you decided to open a Lifetime ISA, you could keep your Help To Buy ISA open too
- Both have a government top up bonus of 25% however, you can only use the government bonus for one of the accounts when buying your first home. Therefore, unless you're using the LISA for retirement, you probably want to either stick with your Help to Buy ISA or transfer it to a LISA (we offer a transfer facility - see last paragraph)
- The Lifetime ISA has a higher deposit limit - this means a larger bonus if you fully subscribe. You can save £4,000 a year in a Lifetime ISA, compared with £2,400 (£3,400 in year one) in a Help to Buy ISA. This could mean a much bigger and quicker bonus when compared to a Help to Buy ISA
- Deposits into Help To Buy ISAs are capped at a maximum monthly amount of £200 - you can’t add a lump sum to a Help to Buy ISA. However, your only restriction to a LISA is the £4,000 per year limit, so pay regular amounts of £333 per month, the full £4,000 as a lump sum or something in-between
- A Lifetime ISA can be used to purchase a home valued at up to £450,000 anywhere in the UK, whereas a Help to Buy ISA has a £250,000 limit outside of London
It’s worth bearing in mind that if you do open a LISA with Tembo, that £4,000 per year deposit cap applies to payments made to your Help To Buy ISA and LISA combined if payments are made in the same tax year.
You can choose to transfer all, or just some, of your Help to Buy ISA into a Lifetime ISA – as long as you don't transfer more than your £4,000 annual LISA allowance during a single tax year. If you've already paid into your LISA this tax year, you can only transfer the amount that remains of your £4,000 allowance. To do so, open a Tembo LISA, withdraw funds from your Help to Buy ISA and then pay them into your Tembo LISA. Simple!