Martin Lewis' MoneySavingExpert website has issued advice for how first-time buyers can get a free £1,000 to put towards their first home. The helpful tip came as part of the MSE weekly newsletter which was issued yesterday (April 12).
The team behind MoneySavingExpert, which was founded by Martin Lewis back in 2003, explained how by putting money in a Lifetime ISA (LISA) account each month, you can get an extra £1,000 at the end of each tax year to help buy your first home.
LISA accounts allow new homeowners to get 25 percent bonus from the government. The most you can save in one tax year is £4,000 which means a potential bonus of up to £1,000 if you put the maximum amount in.
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You have to be between 18 to 39 to open a new LISA account, although you can keep saving in an existing account until your 50th birthday, reports The Mirror.
The newsletter advised savers that if they opened a LISA now and maxed it out over the next 12 months, the government will then add a grand to the pot this time next year. The 2023-24 tax year started on April 6 and will run until April 5, 2024.
However, if you plan on making a start on saving for your first home with a LISA, you need to be aware of some of the catches.
Martin Lewis has previously warned that you are only able to use the money on either your first property or your retirement - and if you don’t, you’ll have to pay a penalty of 25% of the amount withdrawn.
If you don't think you'll be able to reach the £4,000 target over the next year, you shouldn't rule out opening a LISA.
You'll still get the bonus on smaller amounts too, so if you're only able to save £1,000 in one year, you'd get £250 from the Government.
Martin also explained that because there is a £450,000 limit on the price of a home you can buy with a LISA, many first-time buyers are losing money due to house prices rising, as the homes they're buying are out of this threshold.
With house prices in the UK rising significantly over the last few years, the Money Saving Expert is currently lobbying the Government to raise the maximum property price in line with house price inflation.
If you're putting money away for your retirement in a LISA, you can only withdraw your cash once you reach the age of 60.
The maximum bonus you can get from the Government is £33,000 if you open your LISA at the age of 18 and max it at £4,000 every year out until you hit 50.
This is unless you're born on April 6, in which case the biggest bonus is £32,000.
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