Get paid to save for your first home

THE stamp duty holiday may be ending, but there’s still another route to free cash for first-time buyers – if you’re the right age at least. Put money in a Lifetime ISA (LISA) and the state chucks an extra 25% on top, up to £1,000 every year.

To open a LISA, which is a tax-free savings account, you need to be aged at least 18 and you can get one up until the day before your 40th birthday. Here are my 10 key need-to-knows.

1. It’s only for someone who’s never owned or part-owned a home.

2. You can use it to buy any residential property (not buy-to-let) costing up to £450,000.

3. You get a 25% bonus on everything, up to £4,000 per tax year, you put in until you’re aged 50. So, if you save £1,000, you’ll have £1,250, and if you save the full £4,000, you’ll have £5,000.

4. Each person has their own LISA, so couples can have one each. Two firsttime buyers, buying a property together costing £450,000 or less, can BOTH open one and save in it, doubling the bonus. 5. A first-time buyer, buying with someone who’s already owned, can still get the bonus.

6. You need to have your LISA open for at least a year to use it to buy a house (so EVERYONE should open one with £1+ now). Even if you’re not ready to start saving, open it with £1 to get the clock started, then when you are ready, there’s no wait (and if not, withdraw the £1 and you’ll get 94p back – no biggie).

7. LISAs can be used for your home exchange and mortgage deposits. When you’re ready to buy, your house purchase solicitor will need to sort out the money for you.

8. LISAs can also be used for retirement savings. The money and bonus can also be taken out once you hit age 60. Though putting money in a pension is more efficient for most.

9. Withdraw cash for owt else, and there’s a penalty. You can take your money out whenever you want, but if it’s not for the property – or at retirement – there’ll be a 25% penalty (remember you’ve already been given a 25% bonus). The maths works out that for every £100 you put in, you get £93.75 back.

10. You can have a LISA alongside other ISAs. The overall ISA limit is £20,000 in the 2021/22 tax year. You’re allowed to split this between a LISA (up to the max £4,000) and put the remainder in a cash ISA, stocks & shares ISA and/or an innovative finance ISA in the same tax year.

The top LISA providers and rates can change at any time, so to find the current top payers go to the constantly updated guide at moneysavingexpert.com/ LISAs. You’ll also find information there on the best stocks & shares LISA options – though those tend to be best for those planning on not using the money for at least five years.

Martin Lewis is the Founder and Chair of MoneySavingExpert.com. To join the 7.5 million people who get his free Money Tips weekly email, go to moneysavingexpert.com/latesttip