Historically, the biggest obstacle first-time buyers face is saving up for a deposit. The average age of a first-time buyer is steadily rising, as property prices increase and wages remain much the same. It doesn’t take a mathematician to see that this doesn’t add up.

With a Lifetime ISA (LISA), if aged 18-39, saving up to £4,000 a year towards a home (or retirement) gives you a 25% Government cash bonus of up to £1,000 on top, plus you’ll receive the tax-free interest too. Now that’s a pretty good deal by our calculations. But what’s the catch? Well, there isn’t one. We explain some of the criteria below:

With a LISA, the money in the account can only be withdrawn for a deposit on your first home, or after reaching 60-years-old. Technically, you’re able to do both as you can retain the account to continue saving into up to aged 50. Opening a LISA at 18 and paying in the maximum each year until then, you can receive up to £33,000 in Government contributions.

Withdrawing money for property or retirement is free of charge, but the charge to withdraw for anything else is currently at 20% until 5th April 2021, going up to 25% from 6th April 2021. You must have had the funds in a LISA for at least 12 months before you’re allowed to withdraw, so if you’re yet to open one, we recommend doing so as soon as possible to get ahead on your purchase.

Changing provider is also free of charge, meaning that you can switch to achieve the best interest rate on offer and maximise your deposit.

The LISA is there for those buying their first home with a residential mortgage, therefore it must be a property that you intend to live in, not rent out. It also covers up to a purchase price of £450,000, including Government schemes such as Shared Ownership and Help to Buy.

For those that have already invested in a Help to Buy ISA (which is now closed to new applicants) as well as a LISA, it’s worth noting that you can only use the bonus from one or the other towards buying a home.

Couples or joint owners can benefit from a LISA each, providing both of you have never owned a property before, which in effect doubles the bonus. Now that’s a win-win.

To discuss your own situation, or for any help and advice on buying your first home, contact us on 01525 40 22 66 or email ampthill@orchards.co.uk.

For more details on Lifetime ISAs, visit the Government website here, or we recommend Money Saving Expert’s guide here.