00:00If you're weighing up whether to transfer from a helped by ISA to a lifetime ISA then stay tuned
00:05as I'm going to cover the pros and cons for moving to a lifetime ISA and I'll also cover
00:10the steps that you need to take to make that switch happen. If you're new to this channel
00:14I'm Matt, I've been a finance consultant for over 10 years working for one of the top consulting
00:20companies in London. I now run my own company and on this channel I talk all things personal finance.
00:25So let's get started. If you're not really aware the helped by ISA is no longer available for new
00:31applicants but if you're an existing helped by ISA account holder then you can continue saving in it
00:37until the 30th of November 2029. For those not familiar with what a lifetime ISA is it's also
00:44a savings account where you can earn interest on the money that you save and as it's an ISA that
00:49interest can grow tax-free. Like the help to buy ISA the lifetime ISA can be used on a deposit
00:55for your first home and has the same 25% bonus on savings but unlike with help to buy the lifetime
01:02ISA can also be used for your retirement. If you're aged between 18 and 39 you can open a lifetime ISA
01:09in addition to your help to buy ISA however you can only use the bonus from one of your accounts
01:14towards buying a home. So unless you want to use the lifetime ISA and its bonus for retirement savings
01:20the main decision is whether or not to keep the help to buy ISA or transfer it to a lifetime ISA to
01:26buy a home. So what are the main benefits of using a lifetime ISA versus a help to buy ISA? Number one is
01:32that you can save up to £4,000 per year with a lifetime ISA versus £2,400 per year with a help to buy ISA.
01:40So you'll be able to save and earn your bonus on your savings quicker with a lifetime ISA. Number two is
01:46that you'll earn a larger bonus if you're able to save over £12,000. The maximum total bonus you
01:53can get with the help to buy ISA is £3,000 as you'll only get the bonus on the first £12,000 saved
02:00whereas the lifetime ISA doesn't have this cap and the maximum bonus is £33,000 if you are able to save
02:07£4,000 per year between the ages of 18 and 50. And number three is that whereas with the help to buy ISA
02:14you can only buy a property costing up to £250,000 outside of London and £450,000 in London,
02:22the lifetime ISA allows you to buy a home for up to £450,000 anywhere in the UK. So on the face of it
02:30the lifetime ISA looks financially like the better option to go with but there are also drawbacks to
02:35consider before making the switch from your help to buy ISA. The first is that a lifetime ISA has to
02:40be open for at least one year to be able to use it to buy a home. So if you've not opened an account
02:45yet and you know that you'll buy within a year then this probably isn't an option for you. The
02:50second drawback is that you'll pay a penalty to withdraw cash from your lifetime ISA unless it's
02:55used for your first home or retirement. So if you're not sure if you'll buy a home at all or you think you
03:01might need that money before retirement then the help to buy ISA is the safer option. And the third
03:06drawback is that if you have more than £4,000 saved in a help to buy ISA you'll need to transfer
03:12over multiple tax years to move all your savings to a lifetime ISA. The money you transfer from a
03:18help to buy ISA to a lifetime ISA still counts towards the £4,000 lifetime ISA allowance each tax
03:25year. So if you have more than that saved you'll need to wait until after the 6th of April as that's
03:30the start of the next financial year to move another £4,000. For example if you had £12,000
03:37saved in a help to buy ISA it would take you three tax years to move it all to a lifetime ISA. The timing
03:43is important as if you decide to buy whilst you've got cash in both types of accounts you would
03:48essentially be sacrificing the savings bonus on one pot of money. If you're going to switch then make
03:53sure that you have ample time before you're planning to buy a home to be able to move your cash
03:58and if you don't again it's best to stick with a help to buy ISA. So after considering the pros and
04:04cons if you've weighed it up and made the decision to transfer your help to buy ISA savings to a
04:09lifetime ISA then there are a few steps you're going to need to do. The first is to research the
04:14best lifetime ISA providers and their offerings. I've got another video on my top picks for the best
04:20lifetime ISAs at the moment which I'll leave a link to down below. Once you've picked a lifetime ISA
04:25and you've opened an account you then need to transfer your money across. If your provider allows
04:30for transfers from your help to buy ISA fill in the transfer form when you apply. This then won't
04:36reduce your 20 000 pound ISA savings limit for the financial year. So in summary if you're definitely
04:42planning to buy a home for less than the lifetime ISA allowance of 450 000 pounds you're aged between
04:4818 and 39 you won't be buying a home within a year of opening an account and you can max out the
04:55savings limit then it's probably better to go for the lifetime ISA as you'll get a bigger bonus. But if
05:00you're planning to buy a home quickly you're 40 or over or you're not 100 sure that you'll buy at all
05:07then in this situation it's probably better to stick with a help to buy ISA. I hope this video has been
05:12helpful for you to weigh up the option feel free to leave any questions in the comments give the video a
05:17like and subscribe to my channel I'll see you on the next video
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