'A Lifetime Isa helped us buy a home in just one year': Thousands are boosting deposits using Lisas - should you take one out?

27 February 2019
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New data from Skipton Building Society suggests Lisas are giving first-time buyers a valuable boost when saving up for a deposit. According to the building society, it takes the average Lisa saver buys a home just sixteen months – or 474 days - after opening a Lisa. 

Recent figures from UK Finance show that first-time buyer levels are at their highest in 12 years – suggesting the government incentives such as Help to Buy and the Lifetime Isa (Lisa) may be helping.

Soaring house prices and deposits means it has been increasingly difficult to get on the property ladder in recent times.

With the average deposit for a first home in excess of £20,000, it can take years to save up.

In total, 3,641 first-time buyers bought a home using Skipton’s Lisa in 2018, while the quickest time for a Lisa saver to become a first-time buyer was exactly one year.

The Lisa was introduced in April 2017 and can be opened by anyone aged 18-40. Lisa savers can put away up to £4,000 a year until they are 50 and they are seen as the long-term replacement for Help to Buy Isas.

It can be used by first-time buyers to fund a deposit for a property or taken tax-free at the age of 60, with a tempting 25% bonus on offer.

Hannah and Tom Rumpoles (pictured top) bought their first home in Selby, North Yorkshire, using a Skipton Lifetime Isa in June last year.

Hannah says that without the Lisa they would not have been able to get on the property ladder. 

She says: “We transferred in from a Help to Buy Isa and it took around 12 months of us both saving £344 per month into our individual Lisas, and with it we managed to buy a semi-detached house with three bedrooms and one bathroom.

“People always make out that buying your first home is daunting, stressful and takes forever, so we were actually really surprised by how quick the whole process was and how much we enjoyed it.

“While actually getting on the ladder is definitely the hardest part, you also need to save for the stuff to go inside the house too – we definitely found this more stressful than the actual deposit. The hard work has continued since we moved in that sense, but we love our new home.”

Data from Skipton reveals that the average age of a first-time buyer at the Society is 31, while the average cost of a first property is £193,224.

Meanwhile, when it comes to the interiors of first homes, the average first-time buyer bought a property with two bedrooms, one bathroom and one living area.

Alex Beavis, head of mortgages at Skipton Building Society, says: “While it’s often assumed millennials are too busy spending money on brunch to get on the property ladder, our data helps dispel the ‘avocado theory’. We have seen that hundreds of young people are being savvy when it comes to saving for a house, and they are quick at doing it.

“Market figures show that Skipton’s first-time buyer uplift is part of a far wider trend of increasing confidence and that young people are taking advantage of a flat housing market as well as the Government saving initiatives at their disposal. Now is as great a time as any for young people to consider getting on the property ladder.”

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