HTB ISA/ Lifetime ISA - combining them to use for a house deposit

Question

I opened a HTB ISA with Halifax (paying 3.5%), as soon as they became available in December 2015, and have been contributing the maximum amount since. I then opened a stocks & shares LISA (with the minimum £100) with Nutmeg as soon as they became available. At the time that I opened the LISA with Nutmeg, they indicated on their website that although you couldn't transfer your HTB ISA to their Lifetime ISA at that time, they were planning on making that available in the future. I have recently noticed that their website now says that they will not be offering this service.

Having been self-employed for a while, and moving around the country with different contracts, I was not previously in a position where I was particularly looking to buy a house- just knew that I intended to within the next few years. However, I have recently taken up a permanent position, and due to personal circumstances, would now ideally be looking to stay put for a few years, so am starting to look seriously at buying a house.

I'm in a bit of a tricky situation regarding what to do with my HTB ISA & LISA though- the area I live in means that it's going to be difficult to find a house that I can use my HTB ISA to contribute towards... The £250,000 limit is very much the lower end of properties for sale here- at least with my requirements (minimum 3 bedrooms). There are properties in the surrounding area that would qualify, but as I don't drive, ideally I would like to buy somewhere within walking distance of the city centre.

As the LISA has a greater property price limit (£450,000), it would obviously make sense to try to use this for a deposit rather than my HTB ISA, but I obviously want to transfer the funds that I've saved in my HTB ISA to my LISA before using it for a deposit.

My only thoughts for how to get around this are to transfer my LISA from Nutmeg to another provider that will accept HTB ISA transfers, but I am a bit wary of doing this, as most of the other LISA providers I've looked at seem to require that you manage the investments yourself- which is something I would not be comfortable doing- I would generally have a 'cautious' approach to investment, and when I opened the LISA with Nutmeg, it went through a questionnaire to assess my approach to risk, and tailor my investment portfolio inline with that.

Does anyone have any suggestions for what to do in this situation? I am aware that if I am going to transfer my HTB ISA to a LISA, I will need to do it before April 2018, so I need to make a decision fairly quickly...

Answer 1

If you can't find a shares LISA provider that does the management for you and also accepts transfers in, you could also go to a cash LISA, which won't involve any investment choices or risk, but will also only pay a very small rate of interest.

At the moment there's only one available from Skipton. They do state they offer transfers in from other ISA providers, but aren't explicit about whether this applies to HTB ISAs.

If they don't accept HTB transfers in, you could maybe do something more convoluted: transfer into a stocks+shares LISA provider (such as HL), and then transfer from them to the cash LISA provider. It'll be a lot of hassle, and a bit unfair on the "intermediary", and you'd need to check into any fees carefully first.

I'm not affiliated with any of the providers I mentioned, just giving them as examples of reasonably mainstream/well-known options.

Answer 2

I found an answer to this which I am reasonably happy to accept: I contacted Halifax about this- specifically regarding using my HTB ISA towards a deposit for a property that didn't qualify for the bonus. They said that I can still use the funds from the HTB ISA, along with any funds from a LISA for a deposit- just that I can only claim the 25% government bonus on the value of one of these accounts.

So, I think that the best course of action is to continue paying the maximum amount into the HTB ISA (as 3.5% is a better rate than any other savings account out there at the moment), and then when I do put a deposit down on a house, I can use the Lifetime ISA (with 25% bonus) & cash + interest from the HTB ISA if the property value is > £250k, or use the HTB ISA (with 25% bonus) if the value is < £250k.