What is the LISA?
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This is an Individual Savings Account you can use to buy your first home or save for later life, like retirement.
You have a limit of £4,000 that you can put in each financial year until you are 50.
When you are 50, you will not be able to pay into your LISA or earn any bonus, however your account will stay open and you will earn interest on your savings.
Your annual ISA limit is £20,000, so the cap of the £4,000 LISA limit counts towards your annual ISA limit. Bare in mind that you are only allowed to open one ISA per tax year, so you lose out on £16,000 worth of tax free savings.
Back to the LISA. The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.
Terms and Conditions:
- You must be 18 or over and under 40 to open a Lifetime ISA
- You will be charged 25% if you withdraw money from your ISA for any reason other than:
- To buy your first home
- At aged 60 or over
- If you’re terminally ill, with less than 12 months to live
The withdrawal fee is to recover any Government bonus, essentially withdrawing money for any other reason than the above will result in you receiving less money than you paid in.
- For first time buyers, the price of the property has to be £450,000 or less and you must use a solicitor or conveyancer to act on your behalf as the LISA provider has to transfer the funds directly to them.
Over the last few weeks, we’ve explored the various schemes available for First-time buyers/Home movers with the Governments assistance. If you’ve missed out, or have just joined us, feel free to catch up on the posts here:
- Help to Buy: Equity Loan
- Help to Buy: ISA
- Help to Buy: Shared Ownership
- The Lifetime ISA
- Mortgage Guarantee Scheme: Withdrawn November 2016
Photo credit: homesandproperty.co.uk via Google search.