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Getting on the property ladder can be quite challenging for Brits.
The process requires a deposit and money for solicitor fees, as well as stamp duty. Now first-time buyers could benefit from a savings account to help them with the process.
According to recent MoneySavingExpert advice, the website owned by Martin Lewis, there's a Lifetime ISA which adds a bonus of up to £1,000 a year on top of your savings.
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A Lifetime ISA (LISA) can be opened by anyone aged between 18-39. You can use it to save up to £4,000 a year where you'll receive a bonus of up to £1,000.
It can be used towards a first home costing up to £450,000 or for retirement. The LISA then give you a 25% bonus on top of what you save.
So basically if you manage to pop £4,000 in there over a year, you could receive £1,000 of free cash annually. Plus you'll earn interest on whatever you save.
The bonus is paid every year you save something into the account, until you hit 50. You'll only get the bonus on contributions, not cash interest or investment growth.
But the maximum bonus is £33,000 if you open it at 18, and max it out until you hit 50 (unless you're born on 6 April, when the max is £32,000).
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The thing with an LISA account is that you can't take out the cash for anything else. You'll be charged 25% of the amount withdrawn otherwise.
So you should only open a LISA account if the money is put towards buying a first-home costing up to £450,000 or retirement.
It doesn't matter if you don't have a lot to put into the pot as you could get things going with just £1. If you decide you're not buying anymore, you can withdraw and take the 6p hit.
Even if you've only had £1 in it all year, you can pop the £4,000 (the annual maximum) and within a month, you'll still get the bonus. That way you've got £5,000 towards your deposit.
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- Martin Lewis
- Money
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