Hello, I'd like to open a Lifetime ISA to save up for a property. I can do so only if this is my first property but does this only apply to properties in the UK?
16 September 2021
Question by Pavol
Hello, I'd like to open a Lifetime ISA to save up for a property. However I read that I can do so only if this is my first property. I cannot previously have owned, wholly or in part, any property for any purpose. Does this apply to property ownership within the UK or in any country?
Answered by Allie Llewellyn
Thank you for your question. I've provided some general information about the Lifetime ISA (LISA) below, which should answer your question in full.
- The LISA is available to you to save for the purchase of your first home or to save for later life. To be eligible to use your LISA towards a property purchase you must be a first-time buyer who has never owned a property, or a share in a property, anywhere in the world. You must be purchasing a residential property in the UK that costs up to £450,000 and you must have had the LISA open for at least a year to be able to apply your savings. If your LISA is not used to purchase your first property, you can access the funds without a penalty from your age 60.
- You are able to open a LISA if you are aged between 18 and 39 and can save up to £4,000 a year with the government adding a bonus of 25%, up to £1,000, on top of your contribution. This bonus is paid every year you save up to your age 50.
- Your LISA interest or investment growth accumulates tax free. You can hold cash or stocks and shares in your LISA, or have a combination of both. The suitability of these options will depend on your timeframe and how comfortable you are with the value of your LISA savings moving up and down in value. I recommend speaking to an adviser to explore your options before making this decision.
- If you do not withdraw your LISA money for the purchase of your first home or after age 60 you will pay a withdrawal charge of 25%.
- If you are contributing to your Lifetime ISA you will be using some of your £20,000 ISA allowance. so if you contribute the maximum £4,000 into your LISA, you would only be able to contribute a further £16,000 into your other ISAs (The bonus doesn't count towards your allowance).
If you believe a Lifetime ISA is right for you, Boring Money has a Best Buys table that you can refer to with reviews and ratings on all the players.
All the best,
Allie is an Independent Financial Planner at Mazars LLP, based in the Birmingham Office, advising individuals and business owners. She works with her clients to deliver bespoke holistic financial planning advice to help them achieve their personal and financial goals throughout the different stages of life.