With Help to Buy ISA’s now only being available to those who have already opened them last year, what is the next best ISA on the market, and why?
In this blog, we’ll outline the key points of the next best savings accounts currently on the market and the incentives included.
If you didn’t get the chance to open a Help to Buy ISA, fear not… Lifetime ISA’s are on the market now and allow you to save up to £4,000 per year and get a 25% bonus on top of your savings.
Open to anyone aged 18 – 39, Lifetime ISA’s (LISA) are a brilliant savings pot for helping towards your first home or towards your retirement.
I want to purchase my first home – how can I use my LISA funds?
To be eligible to use your LISA towards your first home, you must buy a property that costs £450,000 or less under any residential mortgage. The money should be transferred through to your solicitor on exchange to ensure that you aren’t faced with a 25% withdrawal charge.
You must have had the LISA open for at least 12 months to be able to use it towards the deposit of your first home.
Cash LISAs are protected from the FSCS up to £85,000.
I want to use this towards my retirement, but it’s so far away. How will I know that it’s worth it?
If you are using your LISA towards your retirement, the funds are invested slightly differently than if you were towards a deposit on a first home. The money is invested into stock and shares – with any investments, there is an element of risk in what they are invested in and their performance can depend on several circumstances.
Your current age should be an indication towards your attitude to risk towards your investments. As you near towards retirement age, you should consider moving these investments into lower risk, cautious categories which secure the funds in preparation for your retirement.
If you’re using your LISA as an investment towards your pension, Financial Services Compensation Scheme (FSCS) covers you if you lose the money due to the product provider of the investment going bust. Generally, if you are due compensation for any bank, stock or share going bust that you may have invested in, you’d get 100% of the first £85,000 back.
There are plenty of benefits to opening a Lifetime ISA ensuring that your money is given the best bonuses as your money grows on a tax-free basis.