If you’re a First Time Buyer, here’s how to get £2,000 absolutely FREE from the government to put towards your house purchase, in just over a year.
Note: to gain access to the first £1,000 you will need to have £4,000 in savings by the end of the tax year (5th April). I appreciate not everyone is in such a financial position, even if you have no savings whatsoever, still read on to learn how to save £1,000.
Open a Lifetime ISA (LISA). Each individual has a personal LISA allowance of up to £4k per tax year for which the government will give a tax-free top-up of 25% i.e. £1,000. So open your LISA and deposit £4,000 by 5th April 2019 and by May you will already have £5,000 towards your first house purchase! There are two types of LISA:
- A Cash LISA (for which the only provider is Skipton Building Society)
- A Stocks and Shares LISA (I would recommend Hargreaves Lansdown)
Note: your LISA must be have been open for at least 1 year before it can be used for a house purchase so only do this if you are planning to buy a house 12 months+ in the future.
From 6th April onwards, set up a standing order for £333 / month. Fast forward one year, come May 2020, you will have saved an additional £4,000 and, again, the government will have bolstered your savings by another £1,000. That brings our running total thus far to £10,000.
Admittedly, for this strategy to work, you need an initial savings pot of £4,000 and then look to save another £4,000 in the 2019-2020 tax year. For many, this represents an ambitious target. However, breaking this down by month, based on a UK average net salary of £1,850 / month, I would say saving the £333 / month is possible for many.
Remember, for both the LISA and HTB ISA the above-mentioned figures are personal allowances. That means a couple with a savings pot of £8,000 today could stand to grow their savings to an impressive £20,000 in just over a year!