Thetownend.com

Hello wise ones of TEF,

I'm in the process of saving money for a deposit for a house. I want to put the money somewhere decent and get as much in return as possible for said cash.

"Use the Help To Buy ISA", I hear you all cry. Well, the issue with that little nugget is that if you want to buy outside London, the limit on the price of the property is 250k - less than what we're going to have to spend. (On a side note, the limit is completely bollocks. If you're going to limit it, put a decent price on it. You really can't get anything for 250k that commutable to London).

So in short, where should I be putting c. £300 a month to get the best return, or is the answer as simple as "walk into your bank and ask them"?

Thanks!

When will you be buying? You'll be able to transfer/convert a HTB ISA to a new Lifetime ISA where the max. property price will be £450,000 but you'll only get the bonus once the LISA has been open for one year (April 2018).

We'll be looking to buy summer 2018 so that could work.... So, open a HTB ISA now, convert it into a LISA next April? And then the government contribution to the HTB ISA gets added only up to the point it is a HTB ISA?

That's right. Then once it's a LISA, you'll get the government bonus on that too.

Makes sense, thanks.

While I've got you Samdy - the LISA - can I have one of those and a pension that my employer contributes too? And presumably after we've withdrawn and bought the house, we can start putting money into the LISA again for long-term savings? 25% is not to be sniffed at so long as I can get my employer contributions too!

Yes, you can have a LISA and a pension at the same time. The LISA allows penalty free withdrawals for 'life events' which for the moment will be property purchase and retirement at age 60. So you can empty it for your house deposit and then start saving (and getting tax relief) again.

Initially, the LISA will be a nice compliment to pension savings, especially for those maxing out their annual allowance for pension contributions. Both attract tax relief of 20% for basic rate tax payers.

Over time I'd expect to see the annual allowance for LISA to increase and for pensions to reduce. I think the LISA is a stealth way of reforming pension tax relief without the immediate political fallout, but that's just personal speculation.

But in short, best play is to max out matched pension contributions and LISA, post house purchase?

Thanks for the help mate, much appreciated. Up to today I was mostly just annoyed that the HTB ISA was shit for anyone in reaching distance of London but I was merely uninformed!