Lifetime ISA’s - Are they right for you?

Are you saving for your first property? Maybe a Lifetime Individual Savings Account (LISA) is right for you.

 A LISA allows you to save up to £4,000 each tax year and in this example, receive a bonus from the Government of £1,000 (25%) until age 50 - that’s free money!

 The main requirements are:

o   You must be between age 18 and 39 to open one.

o   You must hold the account for at least 1 year to receive the bonus.

o   The money must be used to buy your first property (or accessed after age 60 without penalty).

o   The property value cannot exceed £450,000 and must be purchased with a mortgage.

So what are the limitations?

o   Once the money is in, there is a 25% penalty to take it out (that’s on your contribution plus the government bonus).

o   If you have a LISA and Help-To-Buy ISA you can only benefit from one government bonus.

o   The contribution of £4,000 counts towards your annual ISA allowance of £20,000.

o   After age 50, you will no longer receive the Government Bonus.

If using the LISA to purchase your first home, you will need to instruct a conveyancer or solicitor to act on your behalf. The monies will be paid directly from the provider to the solicitor, who in turn, will use the funds towards your deposit.

LISA’s are great way to save for your first property, they are easy to open and are available with most banks and building societies.