Martin Lewis is urging people who have not yet got a foothold on the property ladder to spend £1 now to help buy a house.
The money saving expert, who set up the MSE website and now has a regular TV show on ITV, was on his Martin Lewis Money Show Live on November 28 when he issued a key piece of advice to everyone of a certain age.
He told his financially savvy viewers that if you don’t yet own a house, but you plan to one day, and you’re aged under 39, there’s a reason you should open an account for just £1 – because it could land you a huge bonus towards your first home.
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Martin said: “A lifetime ISA or LISA is for first time buyers for a property UNDER £450,000.
“You can only open it if you’re age 18-39, a 25% bonus is paid on up to £4,000 a year so if you put £4,000 in, £1,000 is paid on top, 25%, that’s the most you can put in.
“Other withdrawals though if you’re not using it for a house under £450,000 you will lose 6.25% so if you max this out, have 20 grand in, if you’re not buying a house or if you’re buying a more expensive house, you’d only get £18,750 back you wouldn’t get the bonus and you would pay a penalty.
“Unless you wait to age 60 where you would get it including the bonus.
“but my big tip if you’ve never owned a house, unless you’re too old, open one [a LISA] with a quid, if you’ve got kids who are 18, 19, put a quid in.
“Why? Because to use the Lifetime ISA bonus you have to have had it open for a year. So put a quid in and then the clock is ticking. And then if you do want to use it in a year you can put your money in and then you get the bonus instantly without having to wait.
“I accept you may lose six and a quarter pence if it isn’t right for you but I think that’s a risk worth taking.”
Martin added that the top rate of savings for a LISA is Moneybox with 4.25%.
The Martin Lewis Money Show Live is still available to rewatch via ITVX
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