- Saving for a first home deposit, which averages £61,090, can be aided by a Lifetime ISA (LISA) or the upcoming First Time Buyer (FTB) ISA.
- A LISA allows individuals aged 18-39 to save up to £4,000 annually, receiving a 25% government bonus (up to £1,000), for either a first home or retirement.
- Key drawbacks of a LISA include a 25% penalty for non-qualifying withdrawals and a £450,000 property price cap, which can result in financial loss if exceeded.
- The forthcoming FTB ISA will replace LISAs, removing the 25% withdrawal charge for exceeding the property cap and having no upper age limit for opening or saving.
- However, critics note that the FTB ISA's bonus will be paid at exchange, meaning savers miss out on potential interest or investment growth on that amount, and the property price cap is expected to remain.
IN FULL
