The bottom line is: No, you won’t miss a thing. The Lifetime Isa is a much better product than the Help to Buy Isa when you’re saving for your first home. If at any given point in time the HTB Isa could have been the right product for you, it is probably no longer the case now.
You withheld some of the advantages of LISA from me, Dom, and you are right on every point. But for the benefit of everyone else, let’s just summarize the benefits: you can save more in LISA compared to HTB (£ 4000 vs £ 2400) and get more bang for your buck when buying your home across the UK for the maximum property value that LISA can be used for is £ 450,000 nationwide (it has been capped at £ 250,000 outside London at HTB Isa).
You can also get a higher savings rate on LISAs, and while the best rate right now is 0.85% from Moneybox, which isn’t spectacular, you can be forgiven for getting a guaranteed 25% interest rate from the government every year.
You can get low interest rates on LISA if you can get a guaranteed 25% interest rate from the government every year
Perhaps the greatest benefit is that the government bonus is deposited into the account when you deposit money on the go. This makes the money grow and avoids the stressful, stupid situation that occurs at HTB Isa where the bonus is only paid out once your home purchase is complete. What’s the point of that?
The only major downside of the LISA compared to the HTB Isa is that you usually have to pay a 6.25% penalty for any funds you withdraw before buying a home, although that withdrawal fee was reduced during the pandemic, so only for They waive the government bonus. This means that LISA is only intended for those who can genuinely commit to buying their first home and have easy access to savings for emergencies housed elsewhere.
But as much as I disagree with the redemption fee for the LISA, honestly nobody can save half-heartedly and without obligation for their first home and expect them to come somewhere these days. You have to find out if this is what you really want or do with your money to do something else, but keeping it in an HTB Isa can change your mind – and so miss out on so much more free money the way – doesn’t mean it especially good at managing things! Fortunately, you sound very focused and determined to achieve your goal. I think you will be very good at managing your savings.
Nobody can save half-heartedly and without obligation for their first home and expect to get somewhere these days
The only other thing to consider is whether or not there is a chance that you can buy it in the next year. This is because you cannot use the LISA to buy a home within a year of opening it. If you’ve built enough savings at HTB Isa to get you across the line in the next 12 months I would stick with it, but knowing it will take longer, switching to a LISA is a breeze.
You can choose to transfer part or all of the HTB ISA into a lifetime ISA, as long as you do not transfer more than your annual LISA allowance of £ 4,000 during a single tax year. Any money you deposited into your HTB Isa this tax year has already been counted towards your ISA allowance totaling £ 20,000. So if you transfer it to your Lifetime ISA, that allowance will no longer be consumed.