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Is it possible to switch to a different LISA provider if I change my mind in the future? And can you change from a Stocks and Shares LISA to a cash one?

25 February 2022

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Question by Emma

Hi, I’m wanting to set up a LISA but need some advice please. I’m also curious as to whether you can transfer LISA providers if I change my mind in the future and if you can change from a stocks and shares LISA to a cash one? Thanks


Answered by Dale Kirkpatrick

Hi Emma

When it comes to Lifetime ISAs, you have a relatively limited choice.

Your first decision is whether it's a cash or stocks and shares LISA? The simplest way to decide this is whether the money is for your first house or for "retirement" (age 60).

If it's for a house, you should use a cash Lifetime ISA - the few options I'm aware of are Moneybox, Skipton and Newcastle Building Society. I wouldn't be too concerned about the interest rate - the bonus is good enough - but I think Moneybox is 0.8% compared to the others at 0.5% in the first year. The catch is that after one year, the Moneybox LISA drops the interest rate to Bank Of England Base Rate (currently 0.25%).

If it's for age 60, you really should go into a stocks and shares LISA because it's going to be there for a long time, so you need to beat inflation - which a cash LISA just won't do. Again, there are limited options. Moneybox again do an invested LISA, or you could go to Nutmeg, AJ Bell, YouInvest or Hargreaves Lansdown. The difference is with Moneybox and Nutmeg, they decide the investments. With HL and AJ Bell, YouInvest, you decide what it's invested in.

If you open one type but decide to switch, you should be able to do it but it will be down to the provider you are using.

Key things to watch out for:
1) If using to purchase your first house, it needs to have been held for a minimum of one year
2) Withdrawals are penalised if they aren't for your first house or at age 60 - they essentially reclaim the bonus plus a little bit
3) You can open them before you are 40, fund them until you are 50, and then access them at 60
4) For buying a house, they can be used for a house worth a max of £450k

Hopefully that's answered your questions, but if not feel free to message me if you want any further clarification or help.

Good luck with it!
Dale

Answered by

Dale Kirkpatrick

Director & Chartered Financial Planner

I’ve been working in Financial Planning since I graduated in 2012. I’ve worked my way up from shadowing a financial planner, working in the admin and paraplanning roles, to being a planner in 2014. After taking a break from exams and starting to work on everything else which is needed to be a financial planner, I then restarted my studies and achieved Chartered Financial Planner status in 2018.