Lifetime ISA - Is It Worth It? Pros & Cons Explained - video Dailymotion

Matt | Personal Finance

Thinking about whether to get a Lifetime ISA? In this video, I walk you through the Pros and Cons of getting a Lifetime ISA (including whether to switch from a Help to Buy ISA), and help you decide if it’s the right move for your savings goals.  I also cover the step-by-step process you need to follow to set up a Lifetime ISA, so you can take full advantage of the benefits.  Whether you’re saving for your first home or looking for ways to maximize your savings for retirement, this video will give you all the information you need to make an informed decision.  Watch now to find out if getting a Lifetime ISA is the right choice for you!  #isa #lifetimeisa #saving #savingmoney #investing #stocks #stockmarket #wealth #wealthbuilding #personalfinance #moneytips #savingmoneytips #personalfinancetips #buyingahome #retirementsaving

Transcript

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

Lifetime ISA - Is It Worth It? Pros & Cons Explained

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