Connect with us

Hi, what are you looking for?

Latest News

How to get up to £1,000 free each year: Martin Lewis on getting 25% when you put cash into LISA

Martin Lewis has described how to get up to £1000 free every year when you deposit money into a Lifetime ISA (LISA) account.

How to get up to £1,000 free every year: Martin Lewis on getting a 25% bonus on your savings when you put money into a lifetime ISA account

Martin Lewis has described how to get up to £1000 free every year when you deposit money into a Lifetime ISA (LISA) account.

Under this scheme, the government provides a bonus of £1 for every £4 set aside, which equates to a 25% top-up.

The maximum a person can save each year is £4,000 and returns are tax free.

This means those using the full allowance can claim an additional £1,000 from the government.

Martin Lewis has described how to get up to £1000 free every year when you deposit money into a Lifetime ISA (LISA) account.

Martin Lewis has described how to get up to £1000 free every year when you deposit money into a Lifetime ISA (LISA) account.

Savers can use some or all of the money to buy a first home at any time – as long as it costs less than £450,000.

“The state will give you a 25% raise on the money you invest. You can invest up to £4,000 per year, which is up to £1,000 bonus per year from the State,” he explained on the Martin Lewis Money Show Live. last night.

He added: ‘Be careful if you think the house you might buy could exceed a maximum LISA house of £450,000.

However, the program is embroiled in controversy, with Martin calling on ministers to act.

LISA accounts were designed to help people under 40 save for their first home.

But savers – who can put money aside until their 40s as long as they open them between 18 and 39 – risk being caught out by a rule limiting the cost of properties to £450,000.

When this amount was set when the program launched in April 2017, it was high enough to ensure that first-time buyers would easily find eligible homes.

Related:  Export of drugs to treat Strep A infections is BANNED by Government amid shortage fears 

Since then, real estate prices have risen by 35%.

By not raising the cap, it means that typical first homes in London and other cities are out of reach, as they are too expensive.

However, the scheme is embroiled in controversy, with Martin calling on ministers to act

However, the scheme is embroiled in controversy, with Martin calling on ministers to act

Savers who are no longer eligible to use the LISA for a first home are then blocked.

If they want to buy a property costing more than the £450,000 cap, to access their LISA money for their deposit, they have to pay a fine which leaves them with less money than they have saved.

Not only do they lose the 25% bonus, but they are also hit with a 6.25% penalty. This can add up to over £1,000.

Martin, founder of Money Saving Expert (MSE), said: ‘This is equity for about half a million young people, the state has sold a savings plan to which for some of them is now a dud.

Related:  Delphi murder suspect pens letter from jail 'begging' for public defender

“If a private company had done this, it would have been close to mis-selling. Savers legitimately expected that – over six years, in the midst of huge house price inflation – under a fair system there would have been an increase in the maximum house purchase limit.

“Without it, a face piece is overpriced, has to spend more on a property, and then has to pay a fine to the state to access the money it has set aside for a deposit.”

Ideally, he would like ministers to change two rules – to allow savers using LISA money to buy an ineligible house to withdraw without penalty and to raise the LISA limit from £450,000 to £607,500 and then index the threshold to house prices thereafter . But he would accept either change.

According to a report by MSE, some 155,600 LISA savers withdrew money between April 2017 and April 2022 and were fined – losing £9.5m of their own money.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Business

If range anxiety is putting you off the idea of owning an electric vehicle, pause for thought for one married couple planning to embark...

Business

When the government announced help with household energy bills last year, businesses were initially left without support, despite higher costs. Following backlash from the...

Business

Base rate bounce: Chase, Tandem and Newcastle BS raise easy-to-access savings rates following Bank of England hike Tandem Increases Instant Access Savings Rate to...

Business

Victoria Scholar of Interactive Investor explains why the FTSE 250 could outperform the FTSE 100 in 2023 Victoria Scholar is Head of Investments at...