Boost your savings with a Lifetime ISA
We get lots of enquiries from customers who are trying to decide whether or not a Lifetime ISA is right for them.
LISA's are a government-backed savings product with a healthy 25% bonus up for grabs, so how will you know if it is the best option for you?
What is a Lifetime ISA?
A Lifetime ISA is a type of longer-term savings account that can be used for various purposes such as a deposit towards your first home or for your retirement.
Like a H2B ISA it offers a government-funded bonus, but it differs in that its usage is not limited to saving for a home and a more generous amount can be paid in per year.
However, it also has different restrictions, including who can qualify for one and how soon borrowers can access their funds.
Quick facts: Lifetime ISAs
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To open, you can deposit up to a maximum of £4000 as a lump sum per year or make multiple deposits across the year.
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You can contribute a maximum of £4,000 a year (subject to other ISA payments).
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The government will add 25% to your savings, so you could get an extra £1,000 a year max.
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You need to be age 18–39 to open a Lifetime ISA.
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You can keep topping up your account until you’re 50.
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You could earn up to £32,000 of government bonus payments.
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Lifetime ISA contributions can be used for both mortgage and deposit contributions.
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If you want to access your funds within 12 months of setting up your Lifetime ISA, you may have to pay a penalty (except in specific circumstances).
When can I withdraw funds?
If you’re buying a home the funds are available when the deposit is secured, but the account must be open for at least 1 year before you can use it to purchase a property.
If saving for retirement, they become available when you reach the age of 60. The only other time that funds can be made available is if you’re terminally ill with less than 12 months to live. Otherwise you’ll have to pay a 25% charge if you want to withdraw for another reason.
Who is eligible?
To qualify for a Lifetime ISA you need to be aged between 18 and 39 and a UK resident, and if you’re using it for a deposit, you’ll have to be a first-time buyer as well. Regardless of what you use it for, you can deposit into the account and claim the 25% bonus until you reach the age of 50.
Can I use a Lifetime ISA if I’m a first-time buyer?
Yes, in fact you will need to be a first-time buyer if you’re planning to put your Lifetime ISA funds towards the purchase of a property. To qualify for the government bonus, you will need to have opened your account 12 months before purchasing the property.