It’s nearing the end of the month and that means payday is just around the corner. In this month’s #FinanceFriday, our financial experts at WBW Chartered Financial Planners give you their top facts about Lifetime ISAs.
The Lifetime ISA (LISA) is designed to help young people to save not only for a first home, but also for their retirement, without having to prioritise one over the other. The money saved into a LISA may be used towards a deposit on a first home worth up to £450,000 or can be saved until the age of 60 to help fund retirement.
Up to £4,000 of your annual ISA allowance can be saved into a LISA each year by savers between the ages of 18 and 40.
LISA savers will receive a 25% annual government top-up, to a maximum of £1,000 per year. A LISA that is opened at the age of 18 offers the opportunity for 32 years of saving and bonuses. Saving the annual maximum of £4,000 per year over 32 years could net a total government bonus of £32,000.
LISAs are limited to one per person rather than one per household; therefore, two first-time buyers will both receive the government bonus when they buy a home together.
If you make any withdrawals before the age of 60 that are not for the purpose of buying a first home, you will pay a 25% withdrawal penalty on the full amount withdrawn.
Although savers can save into a “Help to Buy ISA” and a LISA, they may only use the government bonus from one account to purchase their first home.