On the face of it, persuading the Chancellor of the Exchequer to pay a large lump sum into your personal savings account seems like the stuff of fairytales but, after yesterday’s budget announcement, it seems that if you are currently 17 or under and will be 18 in April 2017, you will qualify to open a new ‘Lifetime ISA’ that will accrue up to £32,000 in government contributions up until to your 50th year.
The Lifetime ISA will enable any individual saver between the ages of 18 and 40 at the time they open the ISA to save up to £4,000 per annum in their Lifetime ISA. In return, they will benefit from an annual bonus calculated at 25% of the annual contribution made by the saver. The ISA is billed as a way of helping ‘Generation Rent’ into a new home but it’s use is not restricted to home ownership. In addition to the Government’s contribution, you would hopefully accrue an investment return on the cash balance.
You can take all your savings, interest and/or investment growth and bonus out of your Lifetime ISA tax-free after your 60th birthday. If you're buying a first home you can take it out at any point and get all the perks, as long as you've had it for at least a year.
If you take the money out before you're 60 without buying a first home, you get no bonus and there's a 5% penalty on the amount you withdraw. In this scenario you can make a partial withdrawal and lose the perks on the amount taken, but continue to accrue them on what's left in.
If you are over 40 when Lifetime ISAs are launched then unfortunately you will be ineligible for this instrument. However, you will benefit from increases in the annual investment threshold in personal ISAs. Furthermore, if you are eligible for a Lifetime ISA next year, you will be able to roll in £4,000 per annum to your new Lifetime ISA and qualify for the 25% Government contribution in the normal way.
Interestingly, if you are under 40 and already own a house, the Lifetime ISA's is still available to you, perhaps making you born lucky?
For detailed advice on this new financial product we recommend you speak with an Independent Financial Advisor. This information is still out for consultation and may change in due course.
Recent posts
A recent study by Boon Brokers where 1,000 people who had used an estate agent over the last year were surveyed, showed that a whopping 52% said they were pressured into using the estate agents’ in-house mortgage broker.
When will mortgage rates fall further?
7 days ago
Analysts are predicting further rate cuts this year, with the next one possibly coming down to 4% when the Bank of England’s Monetary Policy Committee meet on Thursday 7th August 2025.
The Financial Conduct Authority (FCA) has shared new changes to mortgage rules with the aim to simplify remortgaging, and encourage competition within the mortgage market.
Lloyds boost lending for first-time buyers
14 days ago
Lloyds Banking Group has jumped on the bandwagon to boost lending for first-time buyers as they allocate an additional £4 billion to help first-time buyers on to the property ladder.
As the Loan to Income (LTI) cap has been increased to 5.5 times income, applicants who fit the First Time Buyer Boost criteria could borrow up to 22% more.
The government is introducing mortgage reforms to boost homeownership, stimulate economic growth, and make the housing market more accessible, especially for first-time buyers.
Chancellor Rachel Reeves has announced the most significant mortgage reforms in over a decade—great news for those dreaming of homeownership.
Nationwide ease criteria for first-time buyers
17 days ago
Nationwide ease their ‘Helping Hand’ mortgage designed to help first-time buyers get onto the property ladder by allowing them to borrow up to six times their income.
Ways to save money over the summer holiday
23 days ago
Keeping the kids entertained over the six-week summer holidays isn’t always easy, especially with the cost-of-living making it even more difficult. Below is a list of fun, inexpensive ideas to do over the break
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
More information
Trusted by
