Right now, with the housing markets going up and down like a yo-yo, this leaves many people wondering what they can do to get onto the property ladder. When you are trying to save a significant portion of money to get onto the property ladder only to find that the banks ask for a bigger deposit, this can leave so many people disheartened. But this is potentially where a Lifetime ISA can be a lifesaver…
What Is a Lifetime ISA?
This is where you open an ISA and you are paid a 25% bonus from the government. All you need to open up a Lifetime ISA is £1. So after a month, the £1 you have put in will accrue 25%, making it £1.25. As you can put up to £4,000 into a Lifetime ISA every tax year you can get an extra £1,000 every year from the government.
Using an ISA to Get Your First Home
If you want to use your Lifetime ISA to buy a home you have got to be aware of some of the restrictions. When you are speaking to property consultants like Vail Williams or other specialists you have to be aware of the restrictions. Firstly you need to make sure that the cost of the home is no more than £450,000. First-time buyers can only use the Lifetime ISA to buy a home. And you must be purchasing a home that you plan on living in. This means that you need to find the right type of home. If you are purchasing a home to rent out, this wouldn’t work under the terms of the ISA.
How the Lifetime ISA Works
You can open a Lifetime ISA with any bank or provider that offers the product. You need to be between the age of 18 and 40 and can pay into the Lifetime ISA until you are 50 years old. If you need to access your money you will have to pay a withdrawal charge and less you reach the age of 60, are diagnosed with a terminal illness, and you are purchasing your home and the account has been open for 12 months. If you need to take money out of your Lifetime ISA for any other reason you will have a 25% charge of the amount withdrawn. And this is worked out after the bonus is paid.
A Lifetime ISA is a very useful way to help people save for their first home or retirement. As the property ladder is a very precarious one right now, a Lifetime ISA is a fantastic way to top up an individual’s finances. For those people who are struggling to get onto the property ladder and are under the age of 40 and Lifetime ISA can be a fantastic way to get a little bit extra money. The best thing to do right now is to open one up because even if you put £1 in there you can put money in every now and again up until the age of 50.
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