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Converting a Help to Buy ISA to a Lifetime ISA

Archive for January, 2019

Converting a Help to Buy ISA to a Lifetime ISA

Wednesday, January 16th, 2019

With help-to-buy ISAs being phased out on 30th November 2019, many people are considering transferring their funds into a Lifetime ISA. You’ll still be able to access existing help-to-buy accounts until 30th November 2029, but it’s worth knowing which option is right for you.

Help-to-buy ISAs have been around since before the Lifetime ISA was introduced – each have different conditions. With a help-to-buy ISA, you can use your savings and the government bonus to purchase a home that costs up to £250,000 outside of London, or £450,000 in London. With a Lifetime ISA, the property price limit is £450,000 whether the home is inside or outside of London. With a help-to-buy ISA, your government bonus is paid upon completion, whereas with a Lifetime ISA you can use that bonus towards your deposit when you exchange contracts. You may have previously set up a help-to-buy ISA but are now looking at properties outside of London that exceed that £250,000 limit – so what can you do?

You are free to transfer the savings in your help-to-buy ISA over to a Lifetime ISA, increasing your property price limit outside of London by £200,000; however, you must wait 12 months to access those savings and the associated bonus. The 12 month countdown begins from the date of the first payment, and that includes transferring money from a different type of ISA. If you were to transfer savings from one Lifetime ISA to another, however, the 12 month countdown would not be reset.

Converting to a Lifetime ISA can be a savvy move, but it may not be the right one for you. The help-to-buy ISA is still an option at the moment, and although the Lifetime ISA bonus is added regularly, rather than at the point of purchase, it comes with its own caveats. If the saver decides to use their funds for a different purpose (for long term savings for later in life, for example), there can be penalties.

Both options are helpful for encouraging first time buyers to build their savings, but your personal situation will be unique. If you have any questions around this topic, please feel free to get in touch with us directly.

What does Warren Buffett read?

Thursday, January 3rd, 2019

Warren Buffett, the famous American investor, speaker and philanthropist attributes his success to reading. An Investing student once asked him what the key was and he pointed to a pile of books and said, ‘Read 500 pages every day – that’s how knowledge works, it builds up like compound interest.’

His favourite books range from economist John Maynard Keynes’ classic Essays in Persuasion to former U.S. Treasury Secretary Timothy Geithner’s Stress Test, which offers some fascinating reflections on some of the financial crises over the last ten years.

Following Buffett’s example, a book always makes a great present. It shows you’ve thought about the person, their interests and what you think they might enjoy.

Of course, there are lots of bestsellers out there; fiction, crime, fantasy but there are also some fascinating non-fiction titles too. If you’re buying for someone who’s in business, the books we’ve highlighted below may be particularly relevant. You may also find them of interest yourself.

So here are some top tips from the ‘smart thinking’ category:

Timekeepers by Simon Garfield

This is an engaging look at the way our lives have become dominated by time and the way technology is making everything faster and faster. Garfield examines our obsession with time and our desire to measure it and control it. You may identify with the ‘cauldron of rush’ of modern-day life.

Unlearning Leadership – Guy Bell

The subtitle of this book is ‘Know yourself – Grow your Business’. Bell challenges businesses that put shareholder value before their people, showing that companies which do so often have poor results. Instead, he encourages empathetic leadership and transformative thinking.

The Motivation Trap – John Hittler

If you’re a manager or in some other sort of leadership role, how do you keep your team motivated? Hittler unwraps some of the underpinnings of motivation, explores its limitations and shows when it can be an effective tool, based on his years of coaching experience.

The Power of Habit – Charles Duhigg

Why do we do what we do? How can we change? This is an intriguing insight into what prompts behaviour from exercise to weight loss, market disruption to social revolution and what leads to success.

There you have our recommendations. Happy Book Buying or Happy Reading!

How will equity release affect my family?

Thursday, January 3rd, 2019

The choice of whether or not to release equity from your home ultimately rests with you. However, the decision will have wide reaching consequences for your family. It’s sensible, before releasing equity, to see a financial adviser who will explain the ramifications.

There are two main forms of equity release – lifetime mortgages and home reversion plans.

Most commonly, people choose lifetime mortgage schemes. These mean that you take out a mortgage secured against your house which lets you release some of the wealth tied up in it.

Home reversion plans mean you sell a portion or all of your house at less than market value, in return for a tax-free lump sum.

If you’re married or in a civil partnership, you can take out a policy with your partner. In the event of one of you dying or going into residential care, the other can stay in the home under the terms of the policy.

Your spouse aside, equity release can affect your children and other relatives in a variety of ways.

In the short term, equity release could help your family, provided you spend the money on them. Parents and grandparents are sometimes releasing equity on their home so they can lend it to their children or grandchildren, helping them get on the property ladder. This is sometimes referred to as a ‘living inheritance’.

This said, it will diminish the value of your home, which your children might see as part of their inheritance. Because of regulatory requirements, all equity release products have a ‘no negative equity’ guarantee, as long as they are sold by a member of the Equity Release Council. As a result, you’ll never owe a lender more than the value of your house.

Some equity release products could lead to you repaying a huge amount, leaving your children with a far smaller inheritance than they may have expected. With some plans it’s possible to protect an element of equity as an inheritance plan. Otherwise, you could decide on an interest payment plan, preventing the loan from building up.

It’s best to keep your children in the loop if you decide to release equity. This will avoid any sudden shocks down the line and give them a chance to understand the process. In addition, you should consult an expert to make sure you take out an equity release plan that’s right for you and your family.