If you are currently saving a deposit for your first home, a Lifetime Individual Savings Account (LISA) could be a great option for you! This account rewards you with a bonus of 25% on top of the amount you save per year (£4000 maximum limit per year) – which could really make a difference to your house deposit when deciding which home you can afford and help you reach your saving goals faster. You can use your LISA to buy your first home or save for later life.
What is a Lifetime Individual Savings Accounthttps://clementsfinancial.co.ukcontact-us/?
To open one of these specific savings accounts you must be:
- Between the ages of 18-40, you have to pay your first payment BEFORE you are 40 but can continue serving until you are 50.
- A resident in the uk
- Planning to live in the home (as opposed to renting it out)
A main advantage of saving into this kind of account is that the government will add a 25% bonus to your savings each year. You can put in up to £4,000 per year, so you could be rewarded with up to a maximum of £1,000 per year.
For more details, go directly to the government website here:
https://www.gov.uk/lifetime-isa
Can I buy any property with a LISA?
NO. You must be a first time buyer, therefore the first property that you have purchased yourself. The property being purchased must be £250,000 (£450,000 in London) or less and you must be using a mortgage (as opposed to being bought with cash only). You cannot withdraw your money saved in a LISA until at least 12 months after you made your first payment into the account. You also must use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them.
What if I already have a Help to Buy ISA?
Unfortunately, you are only able to use the government bonus on one ISA scheme. Either the Help to Buy ISA or the LISA towards buying your first property. You can transfer the money you have already saved from a Help to Buy ISA into the LISA. However you would still incur a 25% charge for the withdrawal.
Can you use the LISA if you are buying with someone else?
Yes. If it’s your first property, you can withdraw the money from your LISA to use towards the mortgage. Even if the person you are buying with is NOT a first time buyer. And what’s more, if you are both first time buyers, you could both withdraw from your LISA accounts. And BOTH receive the 25% bonus to go towards your property!
Can you withdraw money from a LISA?
Yes! If you are withdrawing money from a LISA account to buy your first home, you will not be charged. If you have chosen to save in a LISA for later life savings, you may also withdraw the savings when you are 60. The payments have to stop at 50, but the interest will still continue to build for the final 10 years. If you were to withdraw money for any other reason (*other than being terminally ill and having less than 12 months to live) this is classed as an unauthorized withdrawal and would incur a 25% charge.
Can other people contribute to my LISA?
Absolutely! Anyone can contribute to your lifetime ISA, so it’s a great way for families to give money towards a deposit for your first home. Parents can also set up savings for their child’s inheritance (as long as the child is 18 or over).
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