Why a Lifetime ISA could make buying your first home more affordable
Thursday, June 29, 2017
First-time buyers looking to get their foot on the property ladder face more challenges than ever before. As house price rises continue unabated, the dream of getting even a toe on the property ladder is being pushed further out of reach. Research by the Halifax shows that the average price and average deposit paid by first time buyers reached new highs in 2016 and the average deposit has more than doubled over the past decade from £15,168 in 2006 to £32,321 in 2016, an increase of 113%.
But fear not, help is now at hand. The new Lifetime ISA could be the only hope for many young people of getting enough money together to buy their first home.
Here’s the scoop:
The Lifetime ISA (LISA), available from 6th April 2017, is a savings account that will allow those between the ages of 18-39 to save up to £4,000 a year towards their first home or for retirement.
25% government bonus of up to £1,000 each year
Here’s the best bit: the government will then add a whopping 25% annual bonus to these contributions. So if you save the maximum of £4,000, that means an additional £1,000 each year, up to the age of 50 - so it could add up to a substantial amount. Whether you use some or all of your savings towards buying your first home or your retirement, it is good to know your money has been given a big 25% boost.
Buying together bonus
For couples, there’s better news still. If you are using a Lifetime ISA to buy a first home, your partner can also use a LISA to save for the deposit meaning that you can benefit from two lots of government bonuses - doubling your savings effort. Once you have used your savings to buy your first property, you could continue saving into the Lifetime ISA to help towards your retirement and you will still receive the government bonuses.
How to get started
Even if you have only the vaguest of plans to buy your first property at some point in the not too distant future, then opening a Lifetime ISA could be a suitable option for you.