First-time Buyers
Six in 10 aspiring homeowners worry they may never get on the ladder
The barriers to buying are greater than ever, but you can boost your deposit savings by up to £1,000 a year with a Lifetime ISA
Just a third (32%) of under-40s managed to buy a property before the age of 30, according to OneFamily, compared to 63% of those over the age of 55 who’d bought their first home by the same age.
It’s even worse for today’s aspiring homeowners, with six in 10 potential purchasers worried that they may never be able to get on the housing ladder.
The cost-of-living crisis combined with rising house prices and inflation is making owning a home seem like an impossible dream for many under 40s, with the average UK house costing £275,000 according to the ONS – nearly nine times the average salary.
But first-time buyers can boost their savings by taking advantage of a Government backed account that provides a bonus of up to £1,000 each year and tax-free returns.
Lifetime ISA boost
The lifetime ISA account (LISA) is intended to help buyers get a foot on the housing ladder and continue to save for retirement.
They can be opened between the ages of 18-39. Up to £4,000 can be saved each tax year into the account, which is then topped up with a 25% Government bonus – up to a maximum of £1,000 each year.
It’s also possible to switch to a LISA from an ISA, matured junior ISA or matured child trust fund – so long as the value is £4,000 or less.
Paul Bridgwater, OneFamily’s head of investments said: “LISAs can be saved in cash or invested in stocks and shares, but it’s worth remembering that, with the rate of inflation outstripping interest rates, any money held in cash savings is effectively devaluing too.
“A stocks & shares LISA is a good long-term option to consider, allowing investments to track the country’s prosperity to hopefully beat the impact of inflation in the long run.
“Another important point is that any withdrawals that are not for a house purchase are subject to a 25% penalty – so these savings should be thought of as being ringfenced until they are needed.
“Finally, if a LISA is not used for a house purchase then it can be used for retirement provision from the age of 60 and it is possible to continue to pay into the account until the age of 50.”
