The Lifetime ISA will launch on 6th April 2017. The state will add a 25% bonus on top of what you save. This could mean up to £32,000 free cash! Definitely a no-brainer for first time buyers?
Facts about the Lifetime ISA (LISA)
1) You can save up to £4,000 a year, whether this be in one lump sum or by putting the cash in when you can. The state will thenZ add a 25% bonus on top. For example if you save the full £4000 the state will give you a £1000 bonus meaning you will have £5000 (that’s before interest and growth).
2) On the 6th April 2017 the Lifetime ISA will launch. However you must be over 18 but under 40 when you open one. This means that basically if your 40th birthday is on or before 6th April 2017 you will not be eligible to open a Lifetime ISA. The earliest you could’ve been born to be eligible is 7 April 1977.
3) Unlike a Help to Buy ISA with a Lifetime ISA the money is to be used either towards a first home worth under 450,000 or once you’re 60 towards retirement. If your going to be using the Lifetime ISA as a first-time buyer you need to be someone who has never owned a property before, the property needs to be UK residential costing no more than £450,000. You will also need the account open for at least a year before you can use this towards a home, if you need to buy a house before April 2018 then use a Help to Buy ISA. The account stays open even when you use it for a property as this ISA is designed for buying a house and retirement.
4) You can’t have a joint LISA, however if a new couple would like to buy a house together and they are both first time buyers then they can use both of their LISAs, effectively doubling the bonus.
The Lifetime ISA’s as chosen by Martin Lewis are under his ‘Best Buys’, sadly however only some providers offer this product.
Even if this product isn’t so great at the start your best option is to put your money into the Lifetime ISA to get the one year countdown started and if in the meantime a better one opens you can always transfer the amount you have saved across.