AJC homes at Chapelton Aberdeen

The Lifetime ISA: Should you get one?

‘Help to Buy’ is a term on every first-time buyer’s radar, but what does it actually mean and how can it help those looking to get the keys to their first home?

The Help to Buy scheme was started by the Government in 2013 as a solution to help buyers onto the property ladder and as part of this, the ISA was introduced.

The Help to Buy ISA isn’t available for new applicants, but it has been replaced with the Lifetime ISA, often referred to as LISA. What is it and how does it work for first time buyers? Read on to find out.

 

What is a Lifetime ISA?

The Lifetime ISA, or LISA, can be opened by anyone between the ages of 18 and 39. The ISA allows you to save up to £4,000 per year towards your first home or retirement, and the Government will add a 25% bonus on top of what you save.

This means that you could get an extra £1,000 each year and because it’s an ISA, you earn tax-free interest on whatever you save, including the bonus.

 

Can I use a Lifetime ISA to buy a new build home? 

Yes, you can use a Lifetime ISA to buy a new build home. To be eligible for the Government bonus, your first home needs to fit the following criteria:

  • be located within the UK
  • be purchased for £450,000 or less
  • be the only property that you own
  • be purchased with a mortgage

There are a range of desirable new build homes available in Chapelton suitable for first time buyers, from two to three bedroom homes, all of which can use a Lifetime ISA towards the property purchase.

AJC homes at Chapelton

Plot 117 – 2 bedroom detached bungalow from AJC homes at Chapelton is on the market for £240,000

Whatever stage you might be at, we are sure that we have a property that is suitable for you. View our new build homes for sale or get in touch to find out more about our new build homes for first time buyers.

 

How does it work for first time buyers?

You can save up to £4,000 a year in a Lifetime ISA and you can either put funds in as and when, or you have the option to pay in a lump sum. The bonus will be added to your account each month you save funds into your ISA and will only be paid if you’ve contributed that month. It can take anywhere between one to two months to arrive into your account.

To be eligible to receive the bonus, your first property needs to cost £450,000 or less. If you own or have owned another property before, you cannot use the ISA towards your home purchase.

If you put funds into a Lifetime ISA and then do not qualify to use it for a property, you will have to pay a penalty to withdraw your money, unless you keep it for use when you reach the age of 60. Keep this in mind before opening an account.

 

What else do you need to know?

If you want to use your Lifetime ISA towards your first home, it must be open for at least one year to be able to use it. Anyone beginning to think about buying their first home should open a Lifetime ISA, even with the minimum of just £1 to get the ball rolling. This means that if in one year you are ready to purchase your first property, you have the option to add £4,000 to the ISA and within two months, you’ll get the bonus and have £5,000 towards your deposit.

 

I want to buy my first home with my partner. Can we get a joint Lifetime ISA?

You cannot open a joint Lifetime ISA account with a partner, but you can have one account each. If you are buying your first property together and it costs less than the £450,000 limit, then you can both save into your own ISA and each use your bonuses towards your house deposit.

 

More Information

To open a Lifetime ISA, you need to choose a provider and apply to open an account with them directly.

For more information on the Lifetime ISA, please visit the UK Government website for accurate and up to date information.