Mortgage Advice in Manchester

The government’s Lifetime ISA is a fairly new scheme that was introduced in 2017. Most people, if they’ve heard of it, confuse this ISA with the Help to Buy scheme. The Help to Buy ISA was actually discontinued in 2020 when the government decided that they were going to push the Help to Buy Equity loan over its predecessor.

Surprisingly, the lifetime ISA is completely different, it can help you build up savings for your first home or save for later in life. As a Mortgage Broker in Manchester, we are going to show how the Lifetime ISA can help you buy a home as a First Time Buyer in Manchester.

For Lifetime ISA Mortgage Advice in Manchester, check out our MoneymanTV YouTube video below:

Lifetime ISA Explained UK | MoneymanTV

What is the Lifetime ISA?

The Lifetime ISA is a government-led scheme that helps First Time Buyers raise money for their first home or people wanting to save for later in life. ISA stands for Independent Savings Account, so the Lifetime ISA works exactly how it sounds, it’s a savings account and the best thing is that your money grows tax-free.

There is no limit to how much you can save each month, there is just a £4,000 a year cap. Also, as a bonus, the government top up your total annual savings by an extra 25%, so if you meet the £4,000 mark, you will receive an extra £1,000. This brings your total yearly savings to £5,000.

Even if you save £60 a month (£720 a year), you will receive a £180 free bonus from the government. You should know that once the money is inside of the savings account, it cannot be withdrawn without a fee.

How can I spend my savings?

There are two different ways how you can spend your savings. You can either use it to buy your first home or save it up for later in life.

You can use your Lifetime ISA savings to purchase your first home. This has to be your first purchase, it does not affect you if you’re currently renting. If you want to withdraw from the Lifetime ISA without using it to purchase your home, you’re going to have to face a 25% withdrawal charge. This is why you have to be careful of how much you’re putting into it.

As a Mortgage Broker in Manchester, we recommend looking at the Lifetime ISA when you are struggling to afford your deposit or you are planning to buy your first home within the next 5 years or more. You can keep building up your ISA until you want to withdraw the funds for your property purchase.

We only see clients who are using the ISA as their deposit for their first home. So if you are wanting to save for later in life, you can find more information here on the government’s official webpage:

Are there any restrictions?

There are a couple of things that you’ll need to consider when it comes to qualifying for the Lifetime ISA. Here are the requirements for when you are looking to use it to purchase your own home.

Lifetime ISA to buy your first home:

  • This has to be your first home purchase
  • You can only add a total of £4,000 a year
  • The property that you are buying must cost £450,000 or less
  • You must be under the scheme for a least a year before you can make a purchase
  • You must be over the age of 18 but under 40

If you are interested in the Lifetime ISA Manchester and think that it is for you, feel free to get in touch with your Mortgage Broker in Manchester and we can help you get the ball rolling with your ISA.

Mortgage Advice in Manchester

Are you interested in the Lifetime ISA and want to begin your mortgage journey or maybe you are curious about other schemes that could match your situation? If so, now could be the perfect time to get in contact with an experienced Mortgage Advisor in Manchester.

We don’t just specialise in Lifetime ISAs, we have experience with self employed mortgages, Remortgages, and Buy to Lets. We love a good challenge and we would love to try and help you make that first step onto the property ladder.

Date Last Edited: December 11, 2023