The financial expert said it could earn you thousands
Money-saving expert Martin Lewis is sending out an urgent call to action for all 18 to 39-year-olds. The financial expert has highlighted that starting with a modest £1 could help you unlock significant amounts of cash, reports Lancs Live.
On the subject of lifetime ISAs (LISAs), Mr Lewis broke down how these tax-free nest eggs work wonders by offering a hefty 25 per cent bonus for first-time homebuyers or retirement savers. Mr Lewis explained: “If you’re aged 18 to 39 and you’ve never owned a house, then get a pound in a lifetime ISA now, assuming you don’t already have one.
“A lifetime ISA is a savings product where you can save up to £4,000 a year, and the state adds 25 per cent on top towards a qualifying first home. But there’s a rule that says it has to have been open a year before you can get that bonus.”
The finance guru underscored the value of this scheme, stating: “Now that bonus is worth up to a grand a year for you, so you want to have the facility. And just putting a pound in now, even if you’re not ready to use it, means when you are ready to use it, the clock will have been ticking.”
With eye on the future benefits, he added, “You would have had it open a year, so you’re perfectly eligible to suddenly go and get the bonus when you want.
“In fact, parents, on your kid’s 18th birthday, why not get them a LISA and put a pound in it?
“The LISA has its pros and it has its cons. There are some holes in it, and I’ll go through those all in detail in the podcast. But it’s absolutely worth making sure you have the facility to have a LISA set up and running as quickly as possible. And if it all goes wrong, the worst that can happen is you have to pay a 6p fine to take your one pound out at the end. I think it’s worth it.”
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The small print
There are certain conditions attached to using a LISA. If you are looking to buy a house with it, only first-time buyers can use it, which means you can’t own, or have owned, a home in the UK or anywhere in the world.
You will need to be buying a home for no more than £450,000, and it must be for you to live in. You must also use a traditional repayment mortgage.
HMRC calculates bonus payments on a month-by-month basis, based on payments you make into your account from the 6th of the month to the 5th of the following month. LISAs can be combined if both the buying parties have one.
As for the fee, this is scrapped once you turn 60. You can also withdraw the money if you are diagnosed with a terminal illness. There is a withdrawal fee of 25 per cent of any amount withdrawn if you are not buying a house, terminally ill, or have turned 60.