Money saving expert Martin Lewis has issued a warning to first-time buyers hoping to use a Lifetime ISA (LISA) to boost their deposit savings.

Speaking on ITV’s This Morning, Mr Lewis explained that while LISAs offer a fantastic opportunity for first-time buyers to receive a 25% government bonus on their savings, there’s a catch.

What is a Lifetime ISA and how does it work?

A Lifetime ISA is a government scheme designed to help those aged 18-40 buy their first home or save for retirement. For every £1,000 saved, the government adds an extra £250, up to a maximum bonus of £1,000 per year.

This means if you save the maximum £4,000 each year, you’ll receive a free £1,000 bonus from the government towards your first home.

The £450,000 Catch

However, there’s a significant restriction. The property you’re buying must cost less than £450,000 to qualify for the bonus.

With house prices continuing to rise, many first-time buyers are finding themselves priced out of this scheme. Mr Lewis warned that exceeding this limit could lead to hefty fines, wiping out any benefit of the bonus.

First-Time Buyers Feel the Pinch

This news comes as a blow to aspiring homeowners already struggling with rising mortgage rates and the cost of living crisis.

Social media users were quick to express their concerns, with many highlighting the difficulty of finding affordable properties below the £450,000 threshold.

Some called for the government to increase the limit to reflect current market conditions and make homeownership more accessible for younger generations.

Don’t Miss Out: Key Takeaways

• Lifetime ISAs offer a 25% bonus on savings but come with a £450,000 property price cap.
• Exceeding this limit can result in fines, negating the benefit of the bonus.
• First-time buyers are feeling the pressure of rising house prices and the cost of living.

Mr Lewis’s warning serves as a stark reminder for potential homeowners to carefully consider all aspects of the Lifetime ISA before making a decision.