SarahBeenySpringIssue2017 - 49
BUYING AND SELLING ▲
FREE MONEY FROM THE GOVERNMENT?
YES PLEASE, I HEAR YOU SAY. BUT
BEWARE, FOR THE NEW LIFETIME ISA
- LISA - IS NOT RIGHT FOR EVERYONE...
WORDS: KIA HANSEN, IMAGE: GETTY IMAGES
aunched in April, the
Lifetime ISA sounds great,
but it comes with big risk
warnings. Some people may
benefit, but others won't.
The basic facts are: the LISA is
available to people aged between
18-40. You can pay in up to £4,000
a year, then the government adds a
bonus of 25% of whatever you've paid
in. This bonus is paid yearly to start,
then monthly from April 2018.
OF UP TO £32,000
You can continue paying up to
£4,000 a year into a LISA up until
the age of 50, so if you open one at
18, you can potentially earn a bonus
of £32,000. Despite sounding like
a good deal, the introduction of the
LISA has met with mixed response.
Nationwide has said it won't
introduce one as it's too complicated.
Other banks and building societies
will offer it, but not yet.
As well as the 25% bonus, you will
earn a return on the money you've
put in, which can be invested by
the bank or building society as
The LISA is a no-brainer for
THOSE WITH A HELP
cash, or in stocks and shares.
first-time buyers and has several
TO BUY ISA CAN
Cash LISAs are expected to
benefits over a Help to Buy ISA
ALSO HAVE A LISA
pay out the same as ISAs, around
(HTB). Firstly, you can invest
- BUT YOU CAN ONLY
1% per year. Stocks and shares
more into a LISA (£4,000 a
USE THE BONUS
may give a better return, but with
year vs £2,400) and will receive
FROM ONE TO BUY
added risk as their value may fall.
more bonus over the term
The main thing to consider
(potentially £32,000 vs £3,000).
before you start a LISA is you can't
Also, the bonus is paid out yearly
withdraw any of the cash without
(monthly from next year), not on the
penalty unless you are in one of
purchase of the property (unlike the
three distinct situations: you want to
HTB), so you can accrue interest on
buy your first home (you must have
the bonus over the years. Also, if you're
had a LISA for at least 12 months, be
buying with someone else, both of you
buying a property with a mortgage,
can have one, doubling your bonus.
and it must cost under £450,000);
you want to retire and you are aged
Lewis says: 'Even if you have only
over 60; or you have a terminal
an inkling you may buy a home, it's
illness. In all of these situations, the
worth starting it off as soon as you
cash you withdraw will be tax free.
can, even if you only put £1 in it.'
All other withdrawals will incur a
It's worth consulting an expert
hefty 25% exit fee - which could leave
first, however. Get financial advice
you with less cash than you invested.
before you make a commitment.
www.athomemagazine.co.uk MAY 2017 | 049