Latest news with #Lisas
Metro
22-05-2025
- Business
- Metro
How first-time buyers can save more than £50,000 for deposits in Lifetime Isas
First-time buyers are saving up more than £50,000 to put towards the deposit on their home, new figures have revealed. Lifetime Isas, also known as Lisas, were launched to help people get their foot on the property ladder. And new figures from HMRC show the top 25 Lisa withdrawals to buy a home averaged at £51,000 in 2022-23. The figures were revealed thanks to a freedom of information (FOI) request made by money app Plum. Rajan Lakhani from Plum, which is offering a 4.75% Lisa rate, said: 'Against a backdrop of recent global volatility it's reassuring to know the Lifetime Isa can deliver stunning gains, regardless of the broader economic outlook. 'And don't forget that this government boost comes in addition to any interest you earn on savings.' You can access completely fee-free mortgage advice with London & Country (L&C) Mortgages, a partner of Metro. Customers benefit from: – Award winning service from the UK's leading mortgage broker – Expert advisors on hand 7 days a week – Access to 1000s of mortgage deals from across the market Unlike many mortgage brokers, L&C won't charge you a fee for their advice. Find out how much you could borrow online Mortgage service provided by London & Country Mortgages (L&C), which is authorised and regulated by the Financial Conduct Authority (registered number: 143002). The FCA does not regulate most Buy to Let mortgages. Your home or property may be repossessed if you do not keep up repayments on your mortgage. The HMRC figures only included withdrawals which were eligible for the government bonus when it provided the figures. More than 42,800 Lisa withdrawals to buy a home in the 2022-23 financial year were for £10,000 or more, and more than 11,200 of those were for £20,000 or more. However, there are some catches when it comes to buying property with a Lisa deposit. If you've ever owned a property before, whether inside or outside of the UK, you can't use a Lisa towards your home purchase – even if it was an inherited property that you sold straight away and never lived in. And Money Saving Expert Martin Lewis has warned that the £450,000 threshold is a 'serious hole' in the Lisa scheme, calling it 'unfair' and 'off-putting'. Lifetime Isas, otherwise known as Lisas, can be opened by anyone aged between 28 and 39. They can be used to save up to £4,000 a year, which can either be spent on a first home costing up to £450,000, or for retirement after you hit the age of 60. The state adds a bonus of up to £1,000 per year on top of that, plus you earn interest on whatever you save, and that interest is tax free. You must have had your Lisa for at least a year to be able to use it (and the government bonus) towards your first home. If you use the Lisa to buy a house, you can then keep the account and use it to save money for retirement. But savers making withdrawals for any other reason than buying their first home or saving for later life face a withdrawal charge of 25%. The Lisa is an ISA (Individual Savings Account), and you can only pay up to £20,000 into ISAs in the 2025-26 tax year. Therefore, if you put the maximum of £4,000 into your Lisa, you will only be able to put up to £16,000 into any other ISA accounts. Speaking to the House of Commons Treasury Committee earlier this year, he said: 'We have a succession of young people, who are saving in the vehicle they have been encouraged to save in by the state, who are then using, trying to use their savings to buy a first-time property. 'But, due to house price inflation, their property has just tripped above the £450,000 level. And then, not only do they not get the £1,000 a year bonus they were intended to get, they are fined by the state effectively 6.25% of their own money in order to withdraw that money to get the cash out. More Trending 'When I do television programmes on the Lifetime ISA, I have to warn people about that. 'And when I warn them about that, because you have to have the caveat 'that you should only save in this if you are definitely going to buy a property under £450,000', instantly we have a huge dropout in the number of people who get it. 'So, the sentiment that that does is very negative. Generally, in every other way, the Lifetime ISA is potentially superior [than the Help to Buy ISA], but not in that way. And that needs to change.' View More » Martin suggested the £450,000 limit should be increased to catch up with average property prices and index-linked to house prices, potentially on a regional basis due to wide price disparities across the UK. Get in touch with our news team by emailing us at webnews@ For more stories like this, check our news page. MORE: Couple who illegally built £1,000,000 home ordered to tear it down MORE: 'Unfairly maligned and underrated' town revealed as Britain's happiest place to live MORE: I swapped London renting for a £21,000 narrowboat — it's a life of extreme highs and lows
Yahoo
22-05-2025
- Business
- Yahoo
Average first-time buyers in London need almost £140,000 for a deposit
A small fortune separates what first-time buyers think they need for a deposit from reality. In London, this gap is almost £100,000. Nationally, the typical deposit for a first-time buyer stands at £56,700 based on an average property price of £259,700. However, would-be homeowners expect to save just £27,600 — less than half the actual amount required, figures from property site Zoopla show. In London, where property values are the highest in the country, the divide is particularly stark. First-time buyers believe they need a deposit of £39,800, yet the true figure is closer to £138,800 — a £99,000 disparity. Read more: Elizabeth Line drives rents up 31% in three years The South East follows a similar trend. Buyers in the region expect to put down £22,800 — a shortfall of £45,600. Northern Ireland stands out as the only part of the UK where perceptions actually exceed reality. Here, first-time buyers estimate a deposit of £42,000, compared to the actual average of £39,000. Daniel Copley, a consumer expert at Zoopla, said: 'Home ownership clearly plays an important role in the aspirations of UK adults. However, achieving this ambition is challenging due to the considerable affordability gap, with our data highlighting the significant disconnect between what first-time buyers believe they need to save for a deposit and the actual amount required. "This underscores that affordability is a central pillar in people's home-buying decision-making process. Aspiring homeowners should engage with a qualified mortgage broker early on. "They can provide essential guidance on deposit requirements, affordability thresholds and available financing options, ensuring buyers are well-informed as they embark on their property journey." Read more: More interest rate cuts in doubt after surprise inflation surge The affordability crisis is most acute in southern England, where homes in eight of ten towns are valued at more than four times average annual incomes. In contrast, the outlook is more optimistic in northern regions, where 43% of respondents said they believe homeownership is achievable within five years, compared with just 34% in the South. Despite a strong cultural emphasis on homeownership, financial pressure continues to dampen ambition. Nationwide, 73% of those surveyed said that the cost of buying a home in their region makes it harder to prioritise ownership. That figure rises to 77% in the West Midlands and 82% in London. Among millennials, only 9% believe they can realistically prioritise homeownership in their area. Meanwhile, some first-time buyers had more than £50,000 to put towards the cost of their property in 2022-23 after saving into Lifetime Isas, according to HM Revenue and Customs (HMRC) figures. Lifetime Isas, or Lisas, were launched to help people get a foot on the housing ladder or help them save for later life. Read more: Rachel Reeves rules out cutting ISA limit but remains vague on cash savings A freedom of information (FOI) request made to HMRC by money app Plum found that the top 25 Lisa withdrawals made to buy a home in the financial year 2022-23 averaged £51,000. People can save up to £4,000 per year into an Isa up to the age of 50, and the government will add a 25% bonus to savings, up to £1,000 per year. Savers making withdrawals for any other reason than buying their first home or saving for later life face a withdrawal charge of 25%. If someone is using a Lisa for their first home, the property must cost £450,000 or in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Independent
30-04-2025
- Business
- The Independent
Lifetime Isas, how they work and how to make the most of free top-up money from the government
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. Under 40? Thinking about buying your first home or putting money aside for your pension? You might want to consider investing in a Lifetime ISA (Lisa). This is because the government gives you a bonus of 25 per cent on top of everything you put in. That means you could receive £1,000 of free money each year, if you deposit the maximum amount of £4,000. However, there are a few catches. You can only use your Lisa savings to fund the cost of your first home or your retirement. There is a penalty for making any withdrawals that fall outside of these rules, unless you are terminally ill. Here's how Lisas work, who they're best for and how to make sure you're getting the most out of yours. What is a Lifetime ISA? This is a type of Individual Savings Account (Isa) to help you save towards your first home or for retirement. Anyone aged between 18 and 39 can open one and save up to £4,000 each tax year, which runs from 6 April to 5 April the following year. In return, the government rewards you with a 25 per cent bonus – so up to £1,000 per year. Your contributions to a Lisa count toward your overall £20,000 annual Isa allowance. Better still, you can keep paying into your Lisa and receiving the bonus until you turn 50. The bonus is added to your account every month to give your Savings a regular boost You can receive the same bonus whether you open a Stocks and Shares Lisa or the cash version Stocks and shares tend to deliver better returns over longer time periods But here's the fine print: Your Lisa savings can only be used without penalty in three circumstances: To buy your first home (up to £450,000) After you turn 60 If you're terminally ill If you withdraw the money for any other reason, you'll be hit with a 25 per cent penalty - and that doesn't just eat up your bonus, it also erodes your savings too. For example, if you put £4,000 into a Lisa, this would have been boosted to £5,000 thanks to the government bonus. But if you withdrew the £5,000 outside the rules, you would get hit with a £1,250 penalty (25 per cent) - losing both the £1,000 government bonus and £250 of your own money. Who is a Lisa best for? A Lisa works best for two types of savers: either first-time buyers planning to buy a property, or long-term savers who are happy to lock away their money until they hit 60. If you're confident you'll use your Lisa savings for either of these purposes, the bonus gives you a 25 per cent return on your money, irrespective of any earnings from interest or investment growth. And, if you're a couple and as long as you're both first-time buyers, you can each use a Lisa to boost your savings. That means there's up to £2,000 of free government money up for grabs each year. But if you think you might need to access these savings early – or your property budget is likely to exceed the £450,000 cap – you may want to consider investing in a regular ISA instead. Lisa considerations The average house price in the UK in February 2025 was £268,000 - comfortably below the Lisa cap of £450,000. However, there are significant regional disparities. In England, the average is £292,000, compared to £207,000 in Wales, £186,000 in Scotland and £183,000 in Northern Ireland. But in London, the average is £555,625, well above the Lisa cap and more than three times higher than the average for the North East, £160,452. Using your Lisa savings to buy a home which costs more than £450,000 will land you with the 25 per cent penalty. How to make the most of a Lisa If you decide a Lisa is right for you, here's how to get the best out of it. Start as early as you can. Opening a Lisa at 18 gives you up to 32 years to benefit from the bonus – even if you only use it to save for retirement. But even if you start at 30, you could still get up to £20,000 in free money. And if you're saving for a home, just three to five years of contributions could give your deposit a healthy boost. Know what you're saving for. If you plan to buy a home in the next few years, a cash Lisa might be the safer option, as you won't risk losing money if the market drops. If you're saving for retirement and have decades ahead, a stocks and shares Lisa could offer more growth over time. Combine it with other accounts. You can still use your full £20,000 annual Isa allowance alongside the Lisa. For example, save £4,000 in a Lisa and you'll still have an annual tax-free allowance of £16,000 in a cash or investment Isa. Avoid dipping in early. The 25 per cent penalty means you'll get back less than you put in if you don't follow the rules. Only open a Lisa if you're sure you can commit. Where can you open a Lisa? Lisas aren't offered by every bank or provider, but there are still some good options out there. The likes of Moneybox, investor platform AJ Bell, their Dodl app for newer investors, Nutmeg who offer a managed investment Lisa and the more established names like Hargreaves Landsdown or Skipton Building Society all offer different types of these accounts. Ultimately, if you're under 40 and have a clear goal, opening a Lisa is one of the best ways to boost your savings – but only if you use it exactly as intended. Otherwise, you may do better considering other tax-free opportunities. When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.
Daily Mail
22-04-2025
- Business
- Daily Mail
Lifetime Isa penalties too complex for even 'financially literate' savers to grasp
Early Lifetime Isa withdrawal penalties are too complicated, a government report suggests, with even clued-up savers losing out due to a lack of understanding. HMRC found that even those classed 'highly financially literate' often 'overlooked the fact the withdrawal charge penalises the saver beyond the level of bonus on the amount originally invested.' The report added: 'Very few Lisa holders in this research understood the withdrawal charge in full.' For those that were unaware of the full conditions placed on Lisa withdrawal, many viewed the charges as unfair, according to HMRC. Shaun Moore, tax and financial planning expert at Quilter, said: 'People simply do not realise it's not just a clawback of the Government bonus – it's a loss on their own money.' Lisas, launched in 2017, allow holders to save or invest up to £4,000 per tax year, on which they will receive a 25 per cent bonus from the Government on contributions up until they reach 50. Savers can withdraw their funds, along with the bonus, when they purchase their first house, reach the age of 60 or have a terminal illness. Lisa holders can choose to withdraw their funds from their account without meeting these requirements, but doing so will incur a 25 per cent penalty. But not only does this knock out the 25 per cent from the Government, it will also eat into the savings the account holder has themselves contributed. For example, a Lisa containing £800 as well as a £200 contribution from the Government would face a charge of £250 for an unauthorised withdrawal. This means that you would lose out on £50 of your original contribution – scaled up for an account holding £10,000 including the bonus, this is a £2,500 penalty and a loss of £500 of the original contribution. Moore said: 'Once participants in the research understood this, there was broad consensus that the current rules feel unfair. 'Many supported a reduction of the withdrawal charge to 20 per cent, which would at least allow savers to break even if circumstances forced them to dip into their pot.' 'This sentiment was particularly strong among lower-income "irregular" and "cushioned savers", who felt they were being penalised for financial instability rather than poor planning.' 'Savers reported feelings of resentment and frustration at the idea of being charged to access what they saw as their own money, particularly when providers are profiting from holding those funds.' Houses purchased using a Lisa must also be worth less than £450,000, something that has become a problem for many buyers with house prices having risen considerably since the accounts were introduced. If the limit had increased with inflation it would now be around £600,000. Moore added: 'People are much more likely to understand the product if it has one clear purpose: to get on the housing ladder. 'To improve transparency and engagement, we believe the Government should simplify the product and rebrand it as a "First Home Account".'
