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Martin Lewis urges parents with teenagers to set up ‘important’ account

ByReport2

Nov 11, 2023

Martin Lewis has reiterated the importance of this one financial move which could hugely help first-time buyers secure their first home.

It isn't the first time the money guru has mentioned this money-saving technique, but is more important than ever as getting on the property ladder is harder than ever. Taking to X, the MoneySavingExpert founder posted: "If you've children in their later teens or twenties this is an important listen for you and/or them," sending followers to his BBC Radio 5 Live podcast featuring Lifetime ISAs.

Lewis writes in another tweet that by investing just £1 now, it can end up with first-time buyers earning £1,000s.

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A Lifetime ISA savings account is designed for two major purposes: helping you purchase your first home and preparing for retirement. It offers a substantial 25% government bonus on savings up to £4,000 per tax year, potentially adding £1,000 annually to your contributions, tax-free.

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The funds (and the bonus) can be used for buying your first home after the LISA has been open for 12 months, or you can wait to access them for retirement. Each year, you can save up to £4,000 until the age of 50 and the government bonus is paid monthly. You can even transfer your LISA to different providers if you find better rates or wish to change investment strategies.

The LISA is even compatible with other government schemes such as Right to Buy and Help to Buy loans. It takes just £1 to open a LISA and if you plan to buy a house with your partner, they can also have one to double your savings.

However, on his BBC podcast, Lewis has urged first-time buyers to be aware of the potential financial penalties that come with LISAs. Martin said: "If you withdraw money from a LISA before aged 50 for any reason other than buying a qualifying first home, you will be hit with what is effectively a 6.25% penalty."

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