MARTIN Lewis has shared with prospective homeowners how to get £1,000 a year toward buying their own home.
The money saving guru has taken to TikTok to explain how first-time buyers can get the free money through a Lifetime ISA (LISA) saving account.
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He’s explained how the LISA savings account can boost your home-buying pot before, in the MoneySavingExpert weekly newsletter.
In his latest reminder though, Martin opens the 41 second video saying: “If you’ve never owned a house, put a quid in a Lifetime ISA.”
The specific savings account allows you to get a 25% bonus from the government on any money put away towards a first home or retirement.
Martin goes on to explain in the video that if you put £4,000 into the account (the maximum amount allowed each year), you’ll be given £1,000 towards your first home.
You can put anything from £1, to the maximum amount into the account though, and get 25% of that added after 12 months.
But you do have to have had the account open for a year before you get the bonus.
You can also only open a LISA if you are aged between 18 and 39.
In the informative TikTok Martin says: “If you put a pound in now, even if you’re not thinking of buying a house yet, then once you are ready to buy, you’ll be able to get the bonus instantly.”
The money in the savings account can only be used on either your first property or your retirement.
There’s a penalty of 25% of the amount withdrawn if you use the money for anything else.
Opening the account has other benefits too though, as you earn tax-free interest on whatever you save as well as getting the bonus.
The bonus is paid in every year you save something into the savings account, and this will continue until you hit the age of 50.
So you could get up to £33,000 if you opened an account at 18 and continued adding to your savings until that age.
Like with other forms of Individual Savings Accounts (ISAs) the LISA comes in two forms, cash LISAs and stocks and shares LISAs.
You’ll have to keep in mind which you’d rather take out as stocks and shares can be risky and your invested money could go up or down, while a cash LISA will only keep what you put into it.
Martin Lewis’ MoneySavingExpert goes on to advise parents and grandparents wanting to help their kids and grandkids buy a home, to give them cash in gifts or financial aid.
That’s because this cash can be contributed to the LISA, though the under 39 year old will need to be the one to open the LISA account themselves to get quids in.
There are other things to keep in mind that the savings experts point out, including how you’ll need to be buying a property that costs £450,000 or less to qualify for the bonus.
You can’t be a cash buyer either and the mortgage can’t be a buy-to-let deal.
Plus, if you’re putting the money away for your retirement, you can only withdraw cash from the savings account once you reach the age of 60.
They also remind savers to ask their LISA provider to transfer the cash directly to the conveyancer/solicitor, once they’re ready to buy.
Don’t get it transferred to you as if you withdraw it to an account in your name, you’ll pay the 25% withdrawal charge.
MSE also explains in its guide that even if your purchase ends up falling through, you won’t miss out and the funds will go straight back to the LISA account they came from.
Martin isn’t the first to let savers know just how much they could be stashing away with the savings account as investment platform, AJ Bell, has revealed some Brits boost their retirement fund by £40,000.
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