A recent survey found that over a third of people don't know what a LISA is, with just 15% of people having one. With as much as £1,000 a year of free money up for grabs, we consider it our duty to let you in on the secret!
Unless you are buying a house in cash, you will most likely need to save up for a house deposit as part of the mortgage. This is usually 5-10% of the price of the home, which can feel like Mission Impossible!
This difficulty simply isn't due to our generation ordering too many Uber Eats. As the above graph shows, average house prices have far outstripped average earnings in recent years.
In 2020, however, an astounding 43% of first-time buyers had saved their full deposit by themselves.
What's their secret?
MEET YOUR NEW BEST FRIEND LISA! 👋
A LISA, or "Lifetime Individual Saving Accounts", is a government-backed scheme to help first-time home buyers.
For every £4 that you put in the account, the government gives you £1. You heard that right: free money!
You can put in up to £4,000 annually and receive a 25% bonus, so if you max out your contributions, you will receive a £1,000 bonus. Every. single. year.
PROS AND CONS OF A LISA
CAN I INVEST MY LISA? 🚀
Absolutely! You can choose between a Cash or Stocks & Shares LISA.
Planning to buy a home in the next few years? It may be worth getting a Cash LISA, to avoid having to withdraw your money during a short-term market dip.
Nothing on the cards for at least another 5-10 years? A Stocks and Shares LISA might be a good option to grow your money. As is always the case with anything that relies on the stock market, this option involves more risk-taking but can see a higher return if your shares do well.
EXTRA TIP
Use tech to make your money work for you!
If you struggle with sticking to a budget and saving, find the right tools to help you break your money habits. Some money apps that are proving popular include Chip and Plum which analyses your spending patterns to suggest an amount to save or Nude which will help guide you through the steps of how to buy a home.
DIG IN DEEPER 👀
'No room of her own: The truth about the gender housing gap' - Refinery 29
Podcast episode: Listen to “Everything you need to know about ISAs”!
Iona Bain has written a great guide to save for a house deposit for Refinery29 here.