As the current government attempts to encourage home ownership, a number of policies and schemes designed to assist home buying, particularly for first-time buyers, have been introduced. We discuss two of these here: the Help to Buy ISA and the Lifetime ISA, or LISA.
Help to Buy ISA
A Help to Buy ISA, launched in December 2015, can be opened by any first-time buyer over the age of 16. Whatever the user saves in one towards their first home, the government will add a cash bonus (a maximum of £3,000) when they close the account to purchase a property.
The LISA is available from 7th April 2017 to ages 18 to 39. Like its Help to Buy counterpart, it can be used for buying a first home in exactly the same way, but can also be used for retirement funds, with the cash bonus (£32,000 maximum) paid annually and the account accessible on or after the holder’s 60th birthday.
This is hard to answer as the LISA in particular is very new and details are still being finalised.
Not everyone is eligible for both. Under 18s and over 40s cannot get the LISA and those who have already owned a house cannot have the Help to Buy ISA.
Assuming you are a first-time buyer of the right age, so could utilise either, which is more profitable? The LISA seems a clear winner, allowing you to save up to £4,000 in a standard year to the Help to Buy ISA’s maximum £2,400 (you can put more in a Help to Buy ISA in the first year) netting you a bigger cash bonus too.
However, if you’re looking to buy a house quickly, the Help to Buy with a bonus could be accessed in as little as three months, as you only need to save £1,600. The LISA has to be open for a full year (12 months) before you’d see any return.
There are a few additional features to look for before you choose your scheme, but in summary, your personal circumstances are your key consideration – go with what works best for you.