The Difference between Lifetime ISA and Help to Buy ISA

ISA stands for individual savings account. It is a particular class of retail investments targeted towards the citizens of the United Kingdom. There are two different types of ISA, aiming towards the first time home buyers:

  1. Lifetime ISA
  2. Help to Buy ISA

The former will be available from 2017 and typically will aim towards assisting savers who have deposited for their first home as well as for their retirement. The Government will provide a 25% bonus on the scheme.

The latter was established at the end of last year and encouraged first time buyers to save for a deposit on their homes. Like the Lifetime ISA, the Government gives an incentive of 25% bonus in order to advance the savings. Read on to know the differences between the two individual savings accounts.

Differences between Lifetime ISA and Help to Buy ISA

1.     Age Limits

People aged 16 and above can create Help to Buy individual savings account if they fulfil the eligibility criteria. However, those who open these accounts have to be financially capable of contributing by 2029. All those people who are between 18 and 49 years of age can open a Lifetime ISA from next year.

2.     Maximum Bonus by the Government

If the account holder has saved the complete £12,000 limit, then the government will a maximum bonus of £3,000 on a Help to Buy ISA. Maximum bonus by the government on the Lifetime ISA is £1,000 per annum upon saving of £4,000 and it shall be paid on annual basis from the age of 118 years until the account holder turns 50 years. This means that a saver can get a maximum of £32,000.  Keep in mind that in both the types of ISAs, the bonus provided is per person and not per household. This implies that people aiming to buy together can both benefit from the scheme.

3.     Withdrawal Conditions

Money from Help to Buy ISA can be withdrawn at any given time period. However, you cannot replace it immediately — you deposit £300 and withdraw £50 from the account, you cannot make another deposit until the next month. There are no additional fees for withdrawing the money but there will be a decrement in the bonus.

For the first 12 month the holding period on the account will be functional before the withdrawal. This also takes into account the government bonus on retirements and first time home purchases.  When you are withdrawing the money for a home, then the money ought to be given to a conveyance. If the withdrawal is not for either one of these purposes, the bonus amount will decline and there will be a charge of 5% interest as well.

Contribution Period

The Home to Buy ISA can be opened until 30th Nov, 2019n and contributions have to be made till the year 2029. By this time, the balance should be £12, 000 including the interest. In Lifetime ISA, the savers are allowed to create their accounts from 18 years – 39 years. However, the bonus will only be paid on the contributions until the account holder turns 50 years.

Property Value

Through the Help to But ISA, saver can buy property worth £250,000 and £450,000 in London. With the Lifetime ISA, account holders can procure any property worth a maximum of £450,000.

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