Stuart Bowman
2-minute read
Last updated:
August 3, 2020
Let's tell you if you can get a mortgage after a quick look at your circumstances
It's really easy to take that first step to getting a mortgage.
Get StartedOften known as a Lisa, a Lifetime Isa is an Isas (Individual Savings Account) that can be used to buy your first home or to save towards your retirement. And since Help to Buy Isas closed to new applicants, people are asking a lot more questions about them.
Lifetime Isas let you save up to £4,000 every year (depending on what other Isas you’ve already got). Every month, the government gives you a 25% bonus on all the cash you put into this Isa. The bonus only applies to the amount you save – not the interest too.
Like all Isas, the interest is tax free. The rate of interest you earn depends on the type of Lisa you have; you can get cash savings and stocks and shares Isas from a range of providers.
If you’re a first-time buyer aged between 18 and 39, you can use the government bonus towards your deposit.
It can be used to buy a house up to £450,000 and you must plan to live in that house – it can’t be used for buy-to-let, for example.
If you are buying a house with your partner and you both qualify, you can combine your bonuses towards the deposit.
You may not have a choice… Help to Buy Isas were only available to new applicants until November 30th 2019.
If you have both, which one is better depends... Lifetime Isas can be used to help buy a house worth up to £450,000 anywhere in the country, not just London.
Another thing to consider is that Help to Buy Isas are cash only – there is no stocks and shares option.
Also, although both pay a 25% government bonus, the maximum you can put in a Help to Buy Isa is £12,000, so the maximum bonus is £3,000. If you plan to be saving for more than 3 years and put £4000 a year away, your useable bonus could be higher with the Lifetime Isa.
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