Free money from the government isn’t really something we hear very often, and a £1000 a year bonus towards your deposit might sound too good to be true. But, if you’re aged between 18 and 39, and saving up that all important deposit for your first home, that exactly what a LISA can offer.
Lifetime ISAs were launched back in 2017, but a lot of first time buyers are still unaware of the potential benefits of these government boosted savings accounts. You can save up to £4000 a year, and the state will add a bonus of 25% - so £1000 added for free if you max out your savings each year. The interest is tax free, and the amount you save doesn’t take away from your usual ISA limits (so you can still save £20,000 a year in an ISA, regardless of your LISA savings).
Remember that the financial year begins April 5th, so if you decide a LISA is a good fit for you, open one before then to get the full savings and bonus payment for this year, and then on April 5th you can do it all again to get the maximum bonus possible!
There are some rules though - you can only withdraw the money for free when buying your FIRST home, or to use towards retirement at the age of 60. Of course you can get your savings out at any time, but if it’s not for one of those two reasons you will be charged a 25% penalty on the amount you withdraw. "In effect, the maths means that withdrawing for reasons other than buying your first home or retirement loses you 6.25% of what you contributed” says Money Saving Expert. We recommend reading their full post here to consider all of the pros and cons, as well as the latest advice on the best LISA accounts to choose from.
Happy saving!
How can Dylan Davies help you?
If you have a property to sell we would love to hear from you. Get in touch to arrange your no obligation property appraisal, or take a look at our free instant online valuation tool for an idea of what your property might be worth. On the other hand if you're looking to buy please make sure you register your interest early, plus keep an eye on our Facebook and Instagram stories for sneak peeks of the properties we have coming to market soon!
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CF15, CF37, CF38, CF39, CF44, CF45, CF72
Posted on: 11 March 2022
