00:00What are the main benefits of using a lifetime ISA versus a help to buy ISA?
00:04Number one is that you can save up to £4,000 per year with a lifetime ISA versus £2,400
00:11per year with a help to buy ISA. So you'll be able to save and earn your bonus on your savings
00:16quicker with a lifetime ISA. Number two is that you'll earn a larger bonus if you're able to save
00:22over £12,000. The maximum total bonus you can get with a help to buy ISA is £3,000 as you'll
00:29only get the bonus on the first £12,000 saved. Whereas the lifetime ISA doesn't have this cap
00:35and the maximum bonus is £33,000 if you are able to save £4,000 per year between the ages of 18 and
00:4450. And number three is that whereas with the help to buy ISA you can only buy a property costing up
00:49to £250,000 outside of London and £450,000 in London, the lifetime ISA allows you to buy a home
00:58for up to £450,000 anywhere in the UK. So on the face of it the lifetime ISA looks financially like
01:05the better option to go with. But there are also drawbacks to consider before making the switch
01:09from your help to buy ISA. The first is that a lifetime ISA has to be open for at least one year
01:15to be able to use it to buy a home. So if you've not opened an account yet and you know that you'll
01:19buy within a year then this probably isn't an option for you. The second drawback is that you'll pay a
01:24penalty to withdraw cash from your lifetime ISA unless it's used for your first home or retirement.
01:30So if you're not sure if you'll buy a home at all or you think you might need that money before
01:35retirement then the help to buy ISA is the safer option. And the third drawback is that if you have
01:40more than £4,000 saved in a help to buy ISA you'll need to transfer it over multiple tax years to move
01:47all your savings to a lifetime ISA. The money you transfer from a help to buy ISA to a lifetime ISA
01:53still counts towards the £4,000 lifetime ISA allowance each tax year. So if you have more
01:59than that saved you'll need to wait until after the 6th of April as that's the start of the next
02:04financial year to move another £4,000. For example if you had £12,000 saved in a help to buy ISA
02:11it would take you three tax years to move it all to a lifetime ISA. The timing is important as if you
02:17decide to buy whilst you've got cash in both types of accounts you would essentially be sacrificing
02:22the savings bonus on one pot of money. If you're going to switch then make sure that you have ample
02:28time before you're planning to buy a home to be able to move your cash and if you don't again
02:33it's best to stick with a help to buy ISA.
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