Putting money in Lifetime ISA for retirement versus putting money in house deposit

[Kloklo]

Hi all,

Just a quick question about using money to pay into Lifetime ISA versus using this money for a house deposit.

I’m saving for a house deposit, and have some savings set aside for this already.

I also have a Lifetime ISA, and save £4000 into it yearly (the maximum allowance). (I also have a workplace pension). I’d like to keep my LISA for retirement savings.

I’ve almost saved up £4000 to put into my Lifetime ISA, but am now wondering if this money should go towards my house deposit instead?

I think £4000 would be a sizeable amount to go towards a house deposit, which is why I’m wondering if it should go to my house deposit, but equally, if I put it towards my house deposit, I’ll have missed putting in £4000 for this year’s allowance into my LISA.

Any suggestions welcome! Thanks!

I guess it depends on how old you are, and how much you're putting in your pension?

My inclination would be to get on the housing ladder, as to me, paying rent money is money down a drain. My own personal feeling there..

I've never understood what's supposed to happen when generation rent become too old to work and have to pay private rent on their pensions. We decided to prioritise getting on the ladder and paying off our mortgage ASAP to avoid this scenario.

Thanks both! I’m 27, and keen to get on the housing ladder ASAP.

In terms of housing deposit, it’s a bit tricky as I’m in London and will be buying on my own, and house prices in/around London are extremely expensive.

I think, in that case, I’ll use the £4,000 saved from this year towards my housing deposit rather than putting it into my LISA.

I have a decent pension with work (defined benefit public sector pension), although I’m aware it’s not necessarily going to stay generous (and I might move jobs at some point too).

Because of this, I’m keen to get onto housing ladder so i can save money on rent and build up equity in a house, and potentially take in a lodger to get some more money in too (obviously the lodger situation is a v long-term plan, and not likely to go ahead for a while due to Covid restrictions)!

Use your LISA for a housing deposit and open a SIPP for your pension?

Other than that for this amount of money it’s down to personal preference. As you are already contributing to a work place pension I’d say housing deposit for that £4000 right now.

Thanks Wannabe!

I treat the LISA as a SIPP, as I was planning on using the money already in there for my (eventual!) retirement, and to add £4,000 into it annually, until I can withdraw it for retirement.

I don’t think it’s worth opening up an actual SIPP in addition to it, as I don’t really have enough to save into a SIPP as well as the LISA (all my savings each year pretty much go into the LISA).

I’ve also opened up a stocks and shares ISA, which I put £100 a month into, and also planning on using that for retirement (and hopefully increasing monthly amount I put into it once I get pay rises - although unlikely to happen for a while, due to govt public sector pay freeze )!