Meet LISA. Not your new BFF, the new Lifetime ISA.
14 June

Meet LISA. Not your new BFF, the new Lifetime ISA.

The Story

The UK Gov wants to help you. They launched a brand new ISA giving first-time home buyers a 25% bonus. HELLO LISA! 

What’s the score?

You can save up to £4,000 a year and the gov will add a £1,000 (25%) bonus. When you are ready, you can use this money towards your first home. 

Anything in the small print?

Yes. You need to hold a LISA for at least a year before you can use it and the money can only go towards a home costing up to £450,000. 

What if I want to buy a home within a year?

Then LISA isn’t for you. Instead look at the Help-to-Buy ISA which also offers a 25% bonus but you could access this after 3 months of saving.  

What if I change my mind? 

Penalty! Withdraw your balance and 25% is knocked off. It isn’t as bad as it sounds because your balance includes the bonus. Say you deposit £4,000 and get £1,000 bonus, taking the balance to £5,000. If you withdraw, 25% is deducted and only £3,750 is returned to you. That is £250 less than you put in (or 6.25%). Painful but not devastating.

If you’re really not sure if you will buy, then go with a Help-to-Buy ISA because there are no penalties on withdrawing but you won’t get the bonus (you can’t have it all!). 

Help! I can’t decide between a LISA and Help-to-Buy ISA…

This is common because the two accounts are very similar. Take our 30-second test to find out which is best for you. 

Do I have to buy a home with a LISA? 

No. You can stash your cash in there until you are 60 and withdraw the money, bonus et-al, in a lump sum. Horray, an extra 25% bounce into retirement BUT higher-rate and additional-rate tax payers (earning over £45,000 a year) HOLD-UP because you can get a much better deal – 40% or 45% tax-relief - by depositing into your pension pot

LISA is my match. Where do I sign-up? 

Online brokers Hargraves Landsdown and Nutmeg are the first to offer LISAs and more will follow as we head towards 2018. 

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