Martin Lewis says people born in these years should pay £1 into bank account now
Martin Lewis says people born in these years should pay £1 into bank account now. BBC Sounds podcast presenter Mr Lewis has urgent advice over the Lifetime ISA, which can be opened by people aged 18 to 40 - so born between 1984 and 2006.
Savers can't deposit more than £4,000 into their account each tax year, but maxing out this allowance will earn them a £1,000 bonus from the new Labour Party government, explained Mr Lewis, the ITV regular and Money Saving Expert founder.
On his BBC podcast, he explained: "The problem with a LISA, the big one, is if you take your money out for any other reason you take a 25% penalty." Mr Lewis said: "Many people especially in London, the South East and other metropolitan areas have been priced out.
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"So they saved as the government told them to but that property is now above £450,000 and to take the money out even to buy a first time property they are facing a substantial." Mr Lewis said: "As a first-time buyer, to get the bonus you have to have the product open for a year. By putting £1 in now, even if you don't intend to use it, you've got the clock ticking.
"So if in a year's time you think; 'oh I'm going to buy a house and it's only £440,000'. You put £4,000 into that LISA for the tax year and the next day you're eligible for the £1,000 bonus." The MSE founder said: "I would personally say that's a decent risk to lose six and a quarter pence for the opportunity to have the bonus if you need it."
You’re able to open a Lifetime ISA if you’re aged between 18 and 39. You can save up to £4,000 each tax year, every year until your 50th birthday. The government will pay an annual bonus of 25% (capped at £1,000 p.a.) on any contributions you make.
Funds can be withdrawn tax-free at any time in order to buy a first home worth up to £450,000, and from age 60 for any purpose. You can open more than one Lifetime ISA, but will only be able to pay into one in each tax year.