Who the heck is LISA?
The world needs more friends like LISA — generous, helpful and super supportive of your goals. Of course by LISA, we mean Lifetime ISAs; the government-boosted account that helps you save or invest for your first home.
In recent years, the number of first-time buyers opening Lifetime ISAs reportedly jumped by 45% (compared with 2018). Thousands of people are starting to see how this account could help them buy a home sooner. And it could help you too.
What is a Lifetime ISA?
A Lifetime ISA is a savings or investment account with a 25% bonus from the UK government. Every tax year (which runs from April to April), you can put up to £4,000 into your LISA and score an extra £1,000 towards your first home.
Think about how much sooner you could buy your place with a bonus like that!
How does the bonus work?
Whatever money you put in (up to £4,000 a year) the government tops it up by 25%. It’s kinda like paying for a meal and getting a free side of jalapeño poppers, but instead of getting heartburn, you get a house.
If you put £4 in, you get £1 from the government. If you put £101 in, you get £25.25 from the government. Ideally, we want to help you put wayyyy more towards your home — this just shows that you don’t need to max out your LISA at £4,000 a year to get your bonus.
The government calculates your LISA bonus every month and it normally takes between 4 - 9 weeks for it to arrive in your account. So, if you put £400 into your Lifetime ISA in May, then you should get your £100 bonus at the start of July.
What are the different kinds of Lifetime ISAs out there?
There are two ways to build your deposit in a Lifetime ISA. You can save it in a cash Lifetime ISA or invest it in a stocks and shares Lifetime ISA. And yep, we have both.
Read our mini-guide on the difference between cash and stocks and shares Lifetime ISAs here.
What makes Lifetime ISAs so great for first-time home buyers?
Martin Lewis from Money Saving Expert calls Lifetime ISAs “a no-brainer” for first-time buyers and honestly? We’re not surprised. Here’s why we think they’re so great for buying your first home…
- Uhh, did we mention you could get up to £1,000 towards your home from the government every year?
- If you open a LISA at 18 and max it out at £4,000 every year up until you’re 50, you could get £33,000 from the government towards your home in total.
- Build your deposit your way with cash and stocks and shares options.
- With a cash Lifetime ISA, your money, the bonus and the interest you earn are all tax-free.
- With a stocks and shares Lifetime ISA, your money, the bonus and your return-on-investments are all tax-free.
- You can buy a home anywhere in the UK up to £450,000.
- Even if you don’t save or invest £4,000 every year, you still get 25% on whatever you put towards your home.
How do I know if a Lifetime ISA is right for me?
The government introduced Lifetime ISAs to help people who are getting their financial sh*t together for some of life’s big events (like buying a home). To make sure the bonuses go to the people who could really benefit from them, the government set some rules about who can save or invest into this type of account.
A Lifetime ISA could be right for you if:
- You’re planning on buying your first home.
- The home you plan on buying will be £450,000 or less.
- You’re over 18, but under 40.
- You’re a UK resident.
- You’re going to use a mortgage to buy your home (i.e. you’re not going to pay for it in full upfront).
- You’re buying the property to live in it, not rent it out.
- You plan on buying your home in over a year (your LISA has to be open for 12 months before you can withdraw any money).
- You’re committed to using the money in this account for your first home. (You can also use a Lifetime ISA for retirement, but that’s another story).
Let’s talk about early withdrawal fees…
This bit is super important.
If you take money out of your Lifetime ISA for your first home (or retirement once you’re over 60) then it’s fee-free. If you take money out for anything else like car repairs, a pet alpaca or an entire wheel of fine, aged parmesan, then you’ll pay an early withdrawal charge of 25% to the government. This means you would get back less than you paid in (you’d lose the government bonus and pay the government an extra £6.25 for every £100 you deposited).
Why open a Lifetime ISA with Nude?
With Nude, you get so much more than a government-boosted savings or investment account.
- An interactive countdown that shows you when you could buy your home.
- Personalised ideas that help you put more money aside.
- Money-saving challenges that could help you buy sooner.
- ‘Team Up’ — our feature where you an your partner (or bestie) can collab on the deposit for your first home together. When you both open a Nude Lifetime ISA, you could get up to £2,000 towards your home every year.
- Features based on behavioural science that help your brain build better money habits.
- A place to keep track of spending.
- Automatic payments to build your deposit in your sleep.
- Sustainable investments with the Nude Stocks & Shares Lifetime ISA.
- Exclusive in-app content about money, mortgages and the home buying process.
- + access to all our exciting, upcoming features!
Ready to open your Lifetime ISA and start saving or investing for your first home?
👉 Install the Nude app and open or transfer your Lifetime ISA now.
👉 Go here to learn more about our Cash and Stocks & Shares Lifetime ISAs.
👉 Read even more reasons why you should use Nude to build your first home deposit.