If you are looking to get on the property ladder or want to start putting a bit of extra cash away to support you in your retirement, you could get a free 25% cash injection to help you on your way!
Savers aged between 18 and 40, who open the new Lifetime ISA when it launches on 06 April, can put away up to £4,000 a year and receive an additional 25% tax free, government bonus until they reach the age of 50. By this time, you could have received as much as £32,000 in free cash! – Who doesn’t want free money?
The Lifetime ISA can be used to save for your retirement in addition to your pension. But, the rewards of only saving in a LISA are not as attractive and here’s why:
You can save in both schemes, but will only be able to use the government bonus from one of them to buy your home. If you are looking to buy a property within the year, the Help to Buy ISA will enable you to get the government bonus faster, with a minimum deposit of £1,600.
But, for those looking or thinking to buy over the next year or so, the Lifetime ISA is far more attractive! Plus, if you already have a Help to Buy ISA and transfer your savings to a LISA before 06 April, the 25% bonus will be applied to the entire amount saved! – Now that’s certainly worth considering!
We have compiled a handy breakdown below to help you quickly see how each compare:
|Question||Help to Buy ISA||Lifetime ISA|
|How much can I pay in?||£1,200 in the first month, followed by £200 a month thereafter||£4,000 a year|
|How does the Government bonus work?||Maximum bonus of £3,000, which you receive upon completion of buying your home||25% applied to your savings at the end of the first year, monthly after that|
|What’s the maximum property purchase price?||Can be used by First Time Buyers to purchase a home up to the value of £250,000 (£450,000 in London)||Can be used by First Time Buyers to buy a residential property up to the value of £450,000|
|How long will I need to have it before I can use it?||No time limit||12 months+|
|How can I use it?||For a mortgage deposit only||Can be used for your mortgage deposit and home deposit|
|Where can I get one?||From most banks and building societies||Stocks and shares providers at present. But, Skipton will have one for launch, and it is expected that other high street banks will follow|
Do you think the new Lifetime ISA will help you reach your savings target much sooner than expected? Are you thinking of buying a property in the near future and would like some advice? Our professional mortgage advisors are at hand to help you with all your mortgage related questions!
They will assess your personal circumstances and explain all your available options, so you can get a good idea of how much you can borrow and/or start searching for your dream home. Their advice is completely free, so get in touch!