Panicking about the deadline for opening a Help 2 Buy account? In this post, I’m talking about another option: Moneybox’s Lifetime ISA.
Panic is setting in at the moment, with the deadline for opening a Help 2 Buy ISA fast approaching (30th November). Despite not having opened mine yet (more on that in a bit), I’ve spent the last couple of months urging everyone I know to open an account.
The way I see it – even if you don’t want to buy or don’t ever see owning a property in your future – it doesn’t hurt to open an account. You can even do this with just £1 before the deadline. Just in case you change your mind at a later date. It’s better to open an ISA and start saving and withdraw that money (for a property or otherwise), than realise two years down the line that you’ve met someone and want to settle down and buy but have missed out on a £3,000 bonus from the government to help you.
The reason why I hadn’t opened my account was because of a) sheer laziness and b) I hadn’t researched enough about it. I’ve always thought opening a Help 2 Buy account was the done thing that everyone should do. I always heard it was the best option out there.
In the end, an advert popped up (on a zombie game I was playing of all sorts), advertising Moneybox’s Lifetime ISA. I didn’t actually think much of the Lifetime ISA part at first. I just really liked the clean interface of the app and the idea of saving. Especially as recently, I’ve spent a lot of time cleaning up my finances.
All About Moneybox’s Lifetime ISA
I downloaded the app to learn more. The more I learned about the Lifetime ISA, the more I liked the sound of it. It is, essentially the same as a Help 2 Buy ISA. It does exactly the same thing and is for exactly the same purposes, bar a few small changes.
For example: the Moneybox Lifetime ISA is pretty much done entirely on an app. Which, for people like you and me, makes it so much easier. It’s easier to keep an eye on things too. There’s always someone right there at the end of the chatbox if you have any issues or questions. You generally get an answer much quicker than you would going into a bank or calling up on the phone.
The maximum amount of bonus cash you get from the government is actually a lot higher too – depending on how long you save for. The maximum bonus is actually £32,000 (assuming max contribution over 32 years) as opposed to £3,000 via a Help 2 Buy account. Of course, you won’t be saving for 32 years to buy your first home! But you have that extra bonus the longer you wait. The max property price is £450,000 too.
If you don’t want to buy a property in the end, the money can instead be saved for retirement.
The only real downside – in my opinion – is that if you change your mind and decide to withdraw early for anything other than a property, you will lose money.
The website states: “If you need to withdraw money for any reason other than your first home or retirement, you’ll pay a government charge of 25% on any sum you withdraw. The effect of this charge is you’ll lose the government bonus plus £6.25 per £100 you contributed.”
This is one thing I thought about a lot especially as I’m not sure I even want to buy a property. However, I am a sucker for dipping into savings. I know that if I have access to that cash in my pocket and can withdraw it for an emergency or chip away at it here and there – I will. So the fact that I cannot do this draws me to it more. Plus, I’ve always thought if I decided to go and travel long term, I like the idea of buying a property and renting it out so I’m earning whilst I’m away.
The website also explains that the account is powered by their partner OakNorth which is covered by the Financial Services Compensation Scheme. This means all savings are protected up to £85,000.
My Thoughts
Overall, I chose to open an account. The app makes it so easy to understand exactly what is happening with my money. I can see what I’m investing and what the government are contributing. I can see how much bonus I have left to claim this year too. The app also works as a great money-saving app in general. You can deposit money as often as you like. You can even link it to your debit card so it rounds up each purchase to the nearest £1 and deposits the extra.
Of course, I’m no expert. I just wanted to share my thoughts because I have struggled reading most advice about Help 2 Buy accounts online. A lot of guides use stuffy language and overcomplicate the whole process.
That’s why I wanted to write this post in a more informal and easier-to-read tone of voice. I hope someone benefits from it.
Of course, many people may feel that the traditional Help 2 Buy ISA is better for them. It is better for some people in some situations. But I wanted to share that there are other options out there before you make a decision. Or choose something just because everyone else has done so or says its the best option.
I would also recommend reading this post by Martin Lewis. He sums up the differences between the two in an easy-to-understand guide. You can also learn more about the Lifetime ISA with Moneybox here.
How about you? What have your experiences been like with plans to one day buy your own property? Let me know!
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