Martin Lewis has urged everyone born in 2008 to put £1 into a Lifetime ISA (LISA) within days of turning 18, calling it "the unbeatable way to save for your first home." The personal finance expert shared the advice in a clip on Instagram, highlighting that the typical age of a first-time buyer in the UK is now 34, making early saving crucial.
How the Lifetime ISA works
Lewis explained that savers can deposit up to £4,000 per year into a LISA, and the government adds a 25% bonus on top of contributions, up to £1,000 annually. This bonus can be used towards a first home purchase. However, the property must cost £450,000 or less, which Lewis noted may be restrictive in London. He warned: "If you buy one over £450,000, there is a penalty."
Key rules and pitfalls
To access the bonus, the account must be open for at least 12 months. Lewis suggested that depositing just £1 at 18 starts the clock, even if savers "forget all about it." He said: "You'll soon get past that year without noticing, and then, if you suddenly need it later on, you can shove your cash in and get your 25% bonus." Withdrawals for non-housing purposes before age 60 incur a 25% charge, which erases the bonus and part of the savings.
First-time buyers must never have owned a home anywhere in the world. The LISA can only be used for a property bought with a standard residential repayment mortgage, not for buy-to-let or cash purchases. The maximum purchase price is strictly £450,000.
Couples can combine LISAs
Couples who are both first-time buyers can pool their LISA savings. If each saves the maximum £4,000 annually, they receive a combined £2,000 government bonus per year, totalling £10,000 annually towards a deposit. Lewis noted this can significantly accelerate home buying, depending on property type and location.
