Back in 2017, the government introduced the Lifetime ISA Scheme. A Lifetime ISA can help you build up savings for your first property or save for later in life. In this article, we will show you how a Lifetime ISA can help first time buyers in York get onto the property ladder.
What is a Lifetime ISA?
The purpose of the scheme is to help First Time Buyers in York either raise additional funds for their first property or save additional cash for a bigger deposit. ISA stands for Independent Savings Account, so the Lifetime ISA works like a savings account and the best part about the Lifetime ISA is the money you grow is tax-free.
There are no limits to how much you can save each month, only a £4,000 a year cap. As an additional bonus, the government top up your total annual savings by an extra 25%. Therefore, if you manage to hit the £4,000 mark, you will receive an additional £1,000. This brings your total yearly savings to £5,000.
Worry not if you only can afford to save £720 a year (£60 per month), you will receive a £180 free bonus from the government. Please be aware that once the money is inside the saving accounts, there is no way to withdraw the cash without paying a fee.
How can I spend my savings?
You have two different ways how you choose to spend your savings. Ether use it to purchase your first property or save it up for a bigger deposit. If you choose to use your Lifetime ISA savings to purchase your first property.
This has to be your first purchase, it does not affect you if you are currently renting. If you want to withdraw from the Lifetime ISA without using it to purchase your home, you will have to pay a 25% withdrawal charge. So, make sure to be extra careful of how much you are putting into your savings account.
As an open and honest Mortgage Broker in York, we have worked in the industry for over 20 years. We recommend looking at the Lifetime ISA when you are either struggling to afford a small deposit or you are planning to buy your first home within the next five years or more.
You can keep building up your ISA until you want to withdraw the funds for your property purchase. We tend ot find, so many homeowners get onto the property ladder by utilising the government’s Lifetime ISA scheme. You can find more information on the government’s official webpage by clicking here.
Are there any restrictions?
There are a few things that you need to consider when it comes to qualifying for the Lifetime ISA. If you are looking to use a Lifetime ISA to purchase a property, here are the conditions:
Lifetime ISA Requirements:
- This has to be your first property purchase.
- You can only add a total of £4,000 a year into your savings account.
- The property that you are buying must cost £450,000 or less.
- You must be under the scheme for at least a year before you can make a purchase
- You must be aged between 18-40.
If you are eligible for a mortgage and looking to utilise the Lifetime ISA scheme, please don’t hesitate to book your free mortgage appointment to speak to a mortgage advisor in York today, we will try our best to find you a suitable mortgage and get onto the property ladder.
Mortgage Advisors in York
If you are interested in the Lifetime ISA and want to begin your mortgage journey. Now is the perfect time to speak with one of our experienced Mortgage Advisors in York. We would love to try and help you make that first step onto the property ladder.
Date Last Edited: December 13, 2024
