Martin Lewis urges people to take £1 out of their bank account now
Martin Lewis says first-time buyers and those looking to invest in property can get a 25% boost. The ITV The Martin Lewis Money Show star spoke out on the BBC Sounds podcast, explaining the benefits of the Lifetime ISA bank account.
He shared: “A Lifetime ISA gives you a 25% boost if you’re an 18-39 year old who is then buying a first-time property. You can put up to £4,000 a year and you get £1,000 a year from the state on top.” He explained: “After a year, if you do want to use it you can get the bonus pretty much straight away but you also have to be buying a house that costs under £450,000.”
He urged people to invest £1 in the account. Mr Lewis said: “I’d open a LISA with a pound now, I’d put the rest in top savings or a top ISA. Then if it turns out to be after a year when you buy the house you can move some of your money into the LISA and get the bonus.
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"But if you’re going to buy it within a year you don’t want a LISA because you’d have to pay a penalty to get it out.” He said : “I would not have been overpaying for the simple reason you can earn 5% in savings and your mortgage is costing you 1.59%. If you think of putting money into the mortgage as saving, you’ve been saving at 1.59% and could’ve been saving at 5%."
He explained: “I would’ve made sure I got a smaller remortgage deal. As soon as the mortgage rate jumps up then I would’ve probably thought of clearing the mortgage. Using savings to reduce what you're borrowing can reduce your mortgage interest rate and increase your choice of mortgages.”
He said: “Self-employed and freelance mortgages are always going to be harder and more difficult to prove. The more difficult it is, the more you need one-on-one guidance,” he added, encouraging the caller to get bespoke mortgage advice."