MARTIN Lewis has revealed a clever £1 savings trick to help get you on the housing ladder – with no risk.
The Money Saving Expert explained how you can open a Lifetime ISA (LISA) with the bare minimum just to get the clock ticking.
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Martin said: “It has to have been open for one year before you get the first-time buyer bonus.
“So my big tip to anyone this maybe worthwhile for is get that £1 in.
“You put £1 in and the clock is ticking and then when you want to use it you can put your money in and get the bonus.”
You won’t start getting the Government bonus until your LISA has been open for a year.
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Even if you don’t end up buying a property, you can withdraw the £1 and only lose 6p.
But if you do decide to use it, you can put in the annual maximum of £4,000 and get the £1,000 bonus towards your deposit.
A viewer who managed to buy his first home after opening a LISA had his success story read out by Jeanette Kwakye on ITV‘s The Martin Lewis Money Show Live.
Tom wrote: “I put £1 in, back in 2021/22 when this was mentioned to activate. Started looking in 2022, and completed beginning of 2023.
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“Thankfully I could use the LISA and got £1000 for free! Thank you Martin!”
Martin responded: “The £1 trick really works and some people get £1,000s on it.”
How do LISAs work?
LISAs are designed to help people save for either retirement or their first home.
The Government adds a 25 per cent bonus to whatever amount you put in, so if you added the maximum of £4,000 you would get £1,000 free.
You can also use the money from one if you are terminally ill and have less than 12 months to live.
You can open one of the accounts with any bank, building society or investment manager, but have to be 18 or over and younger than 40.
You can pay into the account until you are 60.
If you plan on using your LISA to buy your first home there are some rules to follow.
The price of your first home can’t be more than £450,000 and you won’t be able to use the money if you want to rent it out or use it as a holiday home.
If you have set up a Help to Buy ISA, you can transfer it to a LISA, but bear in mind you’ll have to pay more into the account each month to get the full £1,000 bonus from the Government each year.
This is because you can only add a maximum £200 per month into a Help to Buy ISA.
If you want to use the money from your LISA for retirement, you can take it out when you’re 60 or over.
But if you withdraw it before this age, without buying a qualifying home, you have to pay a withdrawal fee of 25 per cent.
For example, if you had savings worth £800, you would get a bonus of £200 from the Government upping your pot to £1,000.
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But, if you withdrew your money early and incurred the 25 per cent fee, you’d be left with £750.
So not only would you lose your Government bonus, but £50 of your own money too.
