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How to Use a LISA to Buy Your First Home

Lifetime ISA (LISA) accounts are becoming an increasingly popular choice for buying your first home. These accounts are designed to be used for either purchasing your first property or for retirement. The idea behind them is that when you save in the account, the government gives you a 25% bonus each year towards the cost of either becoming a homeowner or retiring. For first-time buyers, this is a very attractive option as it means that saving the annual limit of £4k means that each year you save, you can get an additional £1 in your account allowing you to reach your house deposit goals faster. But how do you use a LISA to buy your first home? Let’s find out.

Open the Account

First of all, it’s important to shop around and choose the right LISA for you. You can get LISA accounts that are simply saving accounts while others are Stocks and Shares LISA accounts, allowing you to invest your savings at the same time. A general LISA is often the most popular option for saving for a house deposit as there is less risk associated with them. Check out different providers and ensure that you choose one that ticks all your boxes in terms of how often you can pay into the account, how you pay into the account, and how easily you can manage it.

Start Saving

The next step is to start saving for your deposit. How you do this is entirely up to you. Bear in mind that you can only save up to £4,000 per year in a LISA account. So, if you have more that you want to save each year towards your house deposit, then you may want to consider splitting your savings between the LISA and another savings account such as a regular ISA, stocks and shares ISA, or another high-interest savings account to maximise the amount of money you put away.

Find a Solicitor

Once you have hit your savings goal for the deposit, you are ready to use your LISA savings and any other savings that you might have to put the deposit down for your first home. You will need to find a solicitor for buying a house to use your LISA and ensure that you get access to the government bonus when buying. You can find a good solicitor at Conveyancing Supermarket. Once you have found a property that you want to buy and have been accepted for the mortgage, your LISA provider should have instructions on what to do next to go through your solicitor to pay your deposit and start the process.

Continue Using the LISA

While you will not be able to use the LISA and the government bonus to save for another home once you have bought your first property, you can continue using it to save for retirement. Some people continue using the LISA to save for retirement once they have bought their first home, to take advantage of the bonus again later in life.

A LISA is a great way to get ahead when saving for a house deposit. The more you save, the more bonus you will get to use towards buying your first home.