If you’re thinking about buying a house in Burnley, a place I hold close to my heart, it’s very important to understand how the real estate market works. I’ve spent many years learning all about this area and the housing market here. I’ve helped many people buy homes, from first-time buyers to experienced investors. A question that I often get asked is whether to choose a Help to Buy Individual Savings Account (ISA) or a Lifetime ISA. Using my years of experience and knowledge of the local area, I’ll break down the good and bad points of both these options, to make it easier for you to make a choice. This guide will help you make the right decision for your situation and get you one step closer to owning your dream home in Burnley.
Create a Help to Buy ISA or Lifetime ISA account to save money to buy and become the owner of your first house. The government will add a 25% bonus to your savings. The two accounts have different rules which are important to understand, to pick the right one.
Even though new Help to Buy ISA accounts haven’t been allowed since November 2019, current account holders can use this account to get closer to owning a home, if the home is bought by December 2030. You can save up to £200 every month with this account. The government will add 25% to what you save, up to a total of £3,000. If you’re planning to move house soon, you might find the Help to Buy ISA useful. You can get a minimum bonus of £400, but first, you need to save £1,600.
A Lifetime ISA, in comparison, allows you to save up to £4,000 each year until you’re 50 years old. Each year, the government can give a bonus of up to £1,000. If you plan to save money for a long time, or if you want to buy a more expensive house, a Lifetime ISA may be the best choice. You can get the government bonus at any time when you’re ready to buy your first house.
Your age is important in deciding which account you can get. You can open a Help to Buy ISA if you’re 16 or older. A Lifetime ISA can only be opened if you’re between the ages of 18 and 40. Also, the price of the house you can buy using a Help to Buy ISA is limited to £250,000, or £450,000 in London. For a Lifetime ISA, the limit for the house price is £450,000, wherever the house is in the UK.
You need to know that there are penalties if you take out money from these accounts for something other than buying a house. If you take money out of a Lifetime ISA, you’ll have to pay a 25% penalty unless you’re over 60 years old or seriously ill. If you close a Help to Buy ISA without buying a house, you’ll lose the government bonus. Before you make a decision, think about the future and whether you may need to get to your savings.
Knowing about local housing market trends and future predictions in Burnley can help you make a decision, since these factors could affect which account could get you the best return. A local real estate agent, like me, with a good understanding of the housing market can provide great advice.
To finish, the decision between a Help to Buy ISA and a Lifetime ISA depends on different factors like your age, how much you can save and when you hope to buy your house. Help to Buy ISA is for short-term saving with a lower limit for saving. Lifetime ISA lets you save more every year over a longer time. Remember that there are penalties if you take out money for something other than buying a house and get advice if you need it. As you become a homeowner, you can count on advice from local experts and this helpful guide. Good luck with finding a house!