Does anyone know anything about Help To Buy ISAs?

[OuiOuiMonAmi]

DD has a Help to Buy ISA and is wondering whether to keep it.
She has to claim the bonus by the time she is 27 - and she may well not be ready to buy a house by then, in which case she won't earn the 25% bonus. But the account will still be earning interest (at 1%, which is better than most Easy Access savings accounts).

She was thinking of keeping her money in the ISA, in case she wants to buy a house by then and can get the bonus. But if she doesn't want to buy a house, then she won't really have lost anything (aside from the bonus, obvs), because the account was still earning interest in that time, in the same way that it would if she had a basic savings account. Does that sound right?

(I'm not sure if all that makes sense?!)

I would suggest she looks at transferring it into a LISA (lifetime ISA), similar terms to a help to buy in that the government top up 25% each year but if you don't use it for a house you can use it for retirement as a tax free lump sum at age 60.
The only downside is you are penalised a small amount for taking money out of it but there won't be an age limit on her using it to purchase a house. Take a look at the Skipton building society website all the info is on there.

Thanks but we don't want a LISA, because of the penalty for taking money out - it's now 25%.

But the LISA penalty is only if you withdraw money for anything other than a house or pension - and is equivalent to the 25% bonus that the Govt adds to her contributions!

If she uses the LISA to buy a house there is no penalty!

See item 5 on the link below

www.moneysavingexpert.com/savings/lifetime-isas/

Yep in reality the penalty is only 6.25%, if she's certain she will buy a house at some point then there obviously won't be a penalty.

Thanks guys. The problem is the uncertainty of her buying a house. She definitely wants access to her money in case she decides eg. to go travelling, buy a car etc.

Maybe I've misunderstood but I thought that, if she withdraws her money for eg. a car, she won't pay a penalty with the H2B but she will with a LISA.

Ah, wait, I think I get it now! With the LISA, you get the 25% bonus first and THEN pay a 25% penalty, so you're more or less back where yuo started - is that right?

I thought that you didn't get the bonus AND had to pay a 25% penalty, so yuo were 25% worse off...

@OuiOuiMonAmi

Ah, wait, I think I get it now! With the LISA, you get the 25% bonus first and THEN pay a 25% penalty, so you're more or less back where yuo started - is that right?

I thought that you didn't get the bonus AND had to pay a 25% penalty, so yuo were 25% worse off...

Yes that's right, so say you invested £1000 and got the bonus of 25% (it's paid a month later) you would have £1250. You are then penalised 25% of £1250 = £312.50. So you end up with £1250-312.50 = £937.50. Obviously you have lost a bit but not 25% of £1000.

It might be worth looking to see if she could transfer part of her help to buy into a LISA and keeping the rest as easy access? Or going forward from now start saving into a LISA and keep what is in her help to buy so far separate. I'm pretty sure you can have a help to buy and a LISA open at the same she just won't get the bonus on the help to buy (please double check this though as I'm not 100% sure)

Why does she have to take the bonus by 27? I had a HISA when older than that. Have they changed the rules?

@dayslikethese1

Why does she have to take the bonus by 27? I had a HISA when older than that. Have they changed the rules?

I'm not sure why but the rules say the bonus has to be claimed by 2030. Perhaps because you can no longer get H2B ISAs so they're phasing them out?