If you’re serious about buying your first home, you should consider using your LISA allowance before the 5th April to boost your deposit by a whopping 25%. The LISA (Lifetime ISA) helps first timers struggling with a deposit get their foot on the property ladder.
For every pound saved up to £4,000, the government award a 25% bonus up to a maximum of £1,000. The bonus is available each year and credited monthly, which means you can earn additional interest on this too.
If you already have savings set aside, moving them to a LISA can give them a significant boost. Those with £8,000 or more can bank themselves an extra £2,000, by making two £4,000 contributions either side of the tax year. Over the course of the next month, you can turn an £8,000 deposit into £10,000 and benefit from interest on the entire amount going forwards.
If you are looking to buy with a partner who also happens to be a first time buyer, they can do the same.
The LISA comes with certain strings attatched:
- You must be a first time buyer between the age of 18-39, looking to buy more than 12 months away
- You will be purchasing with a residential mortgage and the property value will be no more than £450,000
In addition, you will be hit with a penalty on withdrawal for any reason other than buying your first home or for retirement from age 60.
There are currently three building societies that offer cash LISAs – Newcastle, Nottingham and Skipton. At time of writing, Newcastle offers the best interest rate at 1.10% AER with the facility to open an account online from as little as £1.