Aspiring first-time buyers are being essentially fined when they buy homes above the scheme’s £450,000 limit, MoneySavingExpert.com said.
Martin Lewis is urging Chancellor Jeremy Hunt to use his Autumn Statement later this month to overhaul “unfair” aspects of Lifetime Isas, which are often used by first-time buyers to get on the property ladder.
Lisas are designed to help people aged 18 to 39 buy their first home, or to save for retirement. They can put in up to £4,000 per year.Those buying above the current £450,000 maximum, who withdraw their deposit from a Lisa, may only get back £937.50 per £1,000 they saved, MoneySavingExpert said. MoneySavingExpert.com said the Government should allow savers using Lisa money to buy a home that is over the limit to withdraw it without penalty immediately.
“Many who have opened Lifetime with government encouragement now have not only a dead duck product, where they won’t get the promised 25% boost, but one with a poisoned beak, because they’re fined to get their money out. “So, those who open them have a legitimate expectation they will be able to use them to buy the type of house they’re considering.”He and his partner had to forfeit some of their own Lisa savings to buy a two-bedroom flat in the capital, because the home was £20,000 above the Lisa limit at £470,000.
“It’s meant to be a scheme to help people buy their first home, but it actually ended up doing the exact opposite, as it took money away.
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