The Government wants people to buy their own homes and encourage them to save for later life. So, it offers an incentive for us to get started, similar to pensions where you don’t have to pay tax on deposits.
The Government will contribute 25% of whatever you put in, up to £1,000 per year.
It’s paid monthly but can take 4 – 9 weeks to hit your account.
Even better, the £1,000 bonus doesn’t affect your annual ISA allowance.
If you put the full £4,000 LISA allowance you’ll end up with a total of £5,000 in your account. Additionally, you’ll still have £16,000 left in your annual ISA allowance for the year.
And if you started from when you were 18 years old and continued putting in the maximum £4,000 per year till the age of 50 you’ll end up with a massive £33,000 free!
If you’re a first-time buyer, maybe you’d have hoped to buy your first property by age 50. But if you’re using a Lifetime ISA for later life, think of that free money plus the effect of 40+ years compound interest!