“Put £1 in a LISA now”
Money Saving Expert founder Martin Lewis has warned 18-40 year olds that they could miss out on £1000 to go towards a deposit ahead of April’s tax year deadline.
Those looking to save for their first house or save for other reasons only have until to April to open a Lifetime ISA (LISA) and qualify for the next 12 month bonus. LISAs are a government scheme that pays savers up to £1,000 a year for a home or to go towards their retirement fund.
Lewis was writing in his weekly newsletter and his warning was simple: “If you hope to buy your first home in the next 10 years, put £1 in a LISA now.”
He goes on to explain that LISAs give first-time buyers “a 25% bonus (up to £1,000/year) on their savings, but only after it’s been open a year. So open one with £1 now, to start the clock, so it’s usable if/when needed.”
Lifetime ISA accounts are open to anyone aged 18-40 but differ from Help to Buy ISAs in that they have to have been open for a year in order to get the 25% bonus. So it makes sense to open one now, in case you end up needing it over the next year. You can then pay up to £4,000 a year into the account, with the 25% bonus being paid 12 months later.
All in all it means that over the lifetime of an account you could get up to £32,000 of government money, as long as you pocketed the maximum £1,000 bonus each year. However before you launch that quid into a LISA and dream of your new home, be warned. If you want to withdraw the money you will be charged 25% of the amount withdrawn, so effectively taking back all the bonuses you may have pocketed. Complicated this banking stuff isn’t it?
But Martin Lewis is always good for some money advice, and does have a way of taking all this jargon and making it sound much simpler. So if you want to feel like a proper adult and are the sort of person who doesn’t break out in cold sweats at simply the thought of buying a house, then go for it!
And if you’re the sort of person who can barely deal with the stress of choosing what to have for tea each evening, then that’s fine too.
https://twitter.com/BrassHarrington/status/1370107277684961283
