Andy Egwim explains the UK Lifetime ISA: you can only use it for your first home or retirement. Save up to £4,000 a year and get a £1,000 government bonus. Couples can each open one to double their bonus, but withdrawing for anything else triggers a penalty.
Questions this video answers
£4,000 per tax year.
25% bonus — e.g., £1,000 on a £4,000 contribution.
Adults aged 18 to 39 in the UK.
Loss of the 25% government bonus; speaker states transfers/withdrawals for other purposes incur a 25% government penalty charge.
Chapters
Jump into the frequently asked questions we get around lifetime isa. There are some questions that keep popping up again and again around the lifetime iser. I'll read out the questions and I'll give you the answer to them. If you've got more questions about the lifetime ISA and you want to ask them, pop them in the comments section of our YouTube and then we'll be able to give you a response. And that way we can also know that you're engaging with the video. So one it says, can a lifetime ISA be used for any other purpose besides buying a home or retirement? No. So the lifetime ISA is designed only for first time home buyers or for retirement savings. I'm sorry, you can't use the money from the lifetime ISA to buy a new Tesla or to fund a holiday to Dubai or wherever you like to go. Maldives maybe. But you can use it to buy your first house or use it towards retirement. If you decide to you to pull out money from lifetime ISA for any other purpose other than this, there's quite a bit of a penalty. First of all, you're going to lose that 25% bonus, so that in itself is not nice. So, lifetime isa, first home and for retirement we jump into the other questions. Number two, what are the rules for using a lifetime ISA to help buy a home? Well, I think it's quite simple. You can contribute up to a maximum of 4,000 in a year and then for each 4,000 you contribute, you get a thousand pounds extra if you're going to buy a house. In my experience, when I bought my first house, I use an ISA because there was no lifetime ISA around in those days. I got my solicitor to write a letter to the treasury or Chancellor, Vice checker, whoever, and they gave a check to actually honor that amount. And I used that as part of my deposit. Right. So going to the next question. Yeah. So how and when will the government bonus get added to the lifetime isa? I think we've asked answer that is either yearly, but if you're going to buy a house, then you can cash it out. Next question. What if I want to withdraw funds from my lifetime isa? Are there penalties? I think we also addressed that point. Yes. If you withdraw funds from your lifetime ISA for any other purpose other than buying your first house or for, with, for your retirement, then you could actually get some penalties. And the first penalty you can get is that you end up not getting the 25% bonus. Yeah. So you really ought to think carefully about it when you're saving for lifetime isa, for instance, of Course, some people say, I've got a house already, I bought my first house, and do I still need a lifetime isa? I'll say, well, if you want to save in the lifetime ISA for retirement, that's a tax efficient way to save the lifetime isa. Is it tax efficient way to save for retirement? All right, so there's a very interesting question here, and I'm going to tell you something about this question, because someone who asked me about this question two years ago, less than two years ago, actually used a very simple strategy and has just recently bought his first house in the uk, having arrived in the UK less than two years ago, and this is it said, can my partner open a separate lifetime ISA if I already have a lifetime isa? And the answer is a resounding yes. The criteria is any adult that is between 18 to 39 years in the UK. So if your partner falls into that category, they cannot can open a separate lifetime. So I'll give you an example. So a surgical registrar who came to the UK less than two years ago, he was thinking, I want to buy my first house. I don't want to spend so much money on rent. I live in the south. And what did he do? He. When he spoke to us@moneywisedoctor.com we talked about, first of all, starting your own lifetime ISA and then starting one for your wife. So for a couple, they had two lifetime ISAs between them and they were maximizing it, maxing it up to 4,000 pounds every year. Of course, you don't have to max it, but for them, they were using as their primary saving. So they are maxing it up to 4,000 every year. So that means 8,000 saved that way. They were getting the maximum of £2,000 every year from the government. And by their second year, they were getting up to £4,000, which they added to their deposit, which approached about £20,000. I was very useful for them in sort of like putting down the deposit to buy their first house. So when I got his call, was very delighted. He was very excited. But he said the LISA helped them to build that base for saving their deposit. So, yes, couples can actually save together in one Lisa, or you can open a separate two separate license to save. Right, let's see if there's any other questions. Yeah, so we've got some of these questions repeat. So I'm jumping through some of the questions that have come in so that we don't have to keep going round and round this. Can I transfer my lifetime ISA into any other ISAs? Yes, you can, but this will incur 25% government penalty charge. I mean, why would you want to do that? Lisa is better than isa. From my experience I used the ISA helped buy when I bought my first house. From my experience I think LISA is better because with Lisa you can actually save a bit more in a year. That means you can get some more bonus, right? So I hope I've been able to answer the questions around lifetime ISA and if you've got any other questions, pop it in the comments below. I will be able to come back, look at them, give you some more detailed answers. But thank you for sticking to the end. And if you wanted to read more detailed article on Lifetime ISA, jump over to moneywisedoctor.com and you see a full detailed article explaining step by step how the lifetime ISA works. And if you are thinking of buying a house and you are looking for reliable mortgage brokers and you wanted to talk to someone who could hold it in your hand and walk you through the steps, you can go and look at mortgage brokers on moneywisedoctor.com that have been vetted by us to make sure that they've got good reputation and they are used to working with doctors on healthcare professionals. Well, if you enjoyed this video, you want to click on the link above and watch the next one looking at other types of ISAs and the various types of ISAs and if there are other topics you like for me to discuss, pop it in the comment and I'll pick it up. Till next time, thank you and remain money wise.
