How a lifetime ISA can help you get on the property ladder.

Thinking of buying your first home?  You could get a little extra help to climb onto the property ladder with a Lifetime ISA.

What is a Lifetime ISA (LISA)?

A Lifetime ISA (LISA) is a tax-free savings account, which UK residents aged 18 to 39 years can take out.  You can put away up to £4000 each tax year until you turn 50.  This annual limit counts towards your overall £20,000 ISA allowance (2023/24 tax year).  For every £1 you save, the Government will add an extra 25p.  So, if you save the full £4000, you’ll receive a £1000 bonus each year.  At age 50, you won’t get any more government bonuses, but your money will continue to grow tax-free.

The savings can be held in cash, stocks & shares, or a combination of both in your Lifetime ISA.  Just make sure you shop around for the best rates if you are looking for a cash Lifetime ISA.  

Are there restrictions on using a Lifetime ISA?

You normally need to hold your Lifetime ISA for 12 months before buying your home. After this time, once you have found a property you wish to buy, you can withdraw your Lifetime ISA savings plus bonus to put towards your deposit. 

If you decide not to buy, you can access your Lifetime ISA tax-free once you turn 60.  However, you will have to pay back the 25% government contribution back before age 60 if you withdrew the funds for any reason other than buying your first home or if you are diagnosed terminally ill.

Is a Lifetime ISA worthwhile?

If you are considering buying in the next few years it is well worth considering a Lifetime ISA.  Every little bit helps when trying to get on the property ladder, and with house prices continuing to rise, saving what you can, will make all the difference later.

If you would like to discuss mortgage options available to you, please contact either Nicki Sparks or Kay Kowalewska and we will be more than happy to support you on your home buying journey. 

Although every effort has been made to ensure that the information provided in this article is accurate and correct, the information provided does not constitute any form of financial advice. We recommend that you take financial advice before making any financial decisions.