Here is how 2 1st time buyers can save enough deposit to buy a £400,000 property in just 2 years…

 

Saving for your 1st house deposit can feel like a long and daunting task, with an end goal that you feel you will never reach. We often get asked “how can I save faster?”. Saving is hard, especially when you have life costs such as rent, utilities bills and a social life. But what if there was a way to supercharge your savings? What if there was a magic bullet to help you and your partner buy your dream home for £400,000 in just 2 years??? 

 

Your prayers have been answered in the form of the governments Lifetime ISA or ‘LISA’! Who would have thought the government would hold the answer to helping you buy your dream home by giving you free money? Well, they are! 

 

A lifetime ISA is available to anybody aged between 18 and 39 years of age with the intention to save for either their 1st home or retirement. But how does this help you get your 1st home quicker? 

 

Well, for every £4,000 a year you save into your Lifetime ISA the government will give you a 25% or £1,000 bonus. Turning your £4,000 into £5,000 each year. You can only have one LISA per person, but a couple buying a house together can have one each which doubles the bonus! 

 

If you both save £4,000 per year, this then becomes £5,000 per year and if you are both saving this amount that’s £10,000 per saved between you by saving just £8,000! If you do this for 2 consecutive years you will have £20,000 saved which is enough to buy a £400,000 property using a 5% deposit. 

 

Now if you are fortunate enough to be able to save more than this you can add those savings I a standard savings account or current account, because you can only have one lifetime ISA. If you can afford to save more than £4,000 per year our advice is to maximise your LISA first to ensure you secure the full 25% bonus on that money first. Any money you can save over and above this amount is then to be saved in a normal savings account. This is because you won’t get a 25% bonus anywhere else, at the time of writing these long-term savings rates are between 3-4% so using the LISA will supercharge your savings compared to the standard savers accounts around. 

 

However, if you withdraw the money for any other purpose other than for your 1st home deposit or retirement you will pay a penalty on the money withdrawn. To ensure the money is being used towards your 1st home deposit, the solicitor claims the bonus on your behalf as part of the legal process. This lets the government know the money is being used as set out by the ISA criteria. You must also have the account open for a minimum 12 months to qualify for the 25% bonus. 

 

So if you are looking to buy your 1st home in the next 12-24 months, open up a Lifetime ISA and supercharge your savings and if you stay the course you and your partner will be in a position to buy a £400,000 home with a 5% deposit.