With Help to Buy ISAs closed to new savers as of November 30th 2019, many people will be looking at other products to help them save up money for a deposit on a first home. One option is the Lifetime ISA. Likewise, if your child has a Child Trust Fund set to mature from next year onwards, it's worth finding out a little more about the Lifetime ISA with its whopping 25% government bonus.
As an officer in the Metropolitan Police, protecting others is one of the most important and fulfilling parts of your job. But while you're out there working hard to keep others safe, you also want to feel confident you're doing everything you can to provide financially for yourself and your family in the future.
That's why it's so important to know what help or products are out there products to help you save for some of life’s major milestones.
If you're currently saving up for a deposit on your first home - or helping your kids get on the property ladder - there are various products out there that can help you along the way, like the Lifetime ISA.
The Lifetime ISA shares some similarities with the Help to Buy ISA, but there are some key differences between the two, which you can read about here. However, the Help to Buy ISA closed to new savers on November 30th 2019.
The Lifetime ISA looks set to remain open for enrolment after this date, and is one option for 18 to 39 year olds saving for their first property or looking to save a little extra for their retirement. If you've already got a Help to Buy ISA, it's still worth finding out about the Lifetime ISA, and if you like the sound of it, you can always switch.
Features and differences
One of the most attractive features of both the Help to Buy ISA and Lifetime ISA for savers is a 25% government bonus on top of what you save. With the Lifetime ISA, the bonus is paid each year – topping out at a maximum of £1,000 a year – to help you save for your first home or retirement.
You'll still be able to get the 25% government bonus with the Lifetime ISA after November 30th. The Help to Buy ISA is now closed to new customers, but existing holders can still save into their account. The deadline for claiming Help to Buy ISA bonuses is December 1st 2030.
If you already hold a Help to Buy ISA, or you're planning to open one before November 30th, you will always have the option to transfer your savings into a Lifetime ISA.
When you think you’ve got enough saved up for a deposit, remember the Lifetime ISA can be used on properties up to a maximum value of £450,000 anywhere in the UK. The Help to Buy ISA is restricted to homes worth up to £250,000, or £450,000 in London.
It's also possible to transfer money into a Lifetime ISA from a Child Trust Fund - a government-backed savings scheme that is now defunct, but could still hold substantial sums for children born at the right time.
Did your child get a Child Trust Fund?
The Child Trust Fund was a government scheme launched to encourage positive savings habits among children and to help set up the youngest members of society for the future.
It provided contributions of between £50 and £1,000 for all children born between September 2002 and January 2nd 2011. Up to £4,368 a year can still be added to these accounts tax-free.
If you have children who were born between these dates but you've lost track of their Child Trust Fund, there are tools available to help you find the account.
The oldest holders of Child Trust Funds will be able to access the funds in their accounts when they turn 18 in September 2020. If any of your kids qualified for these products, you might be thinking about ways they can put any available funds to good use when they reach adulthood.
If they want to get a head start on saving up to buy their first home, they could transfer the money into a Lifetime ISA and start benefiting from the Government's offer of a 25% bonus. You can also make your own contributions to your children's account, knowing that every sum you deposit is going towards securing their future.
Exactly what will happen with Child Trust Funds when they mature is still under consideration by HM Revenue & Customs and the UK's financial authorities. They might become matured trust funds or cash ISAs, but for now, we'll have to watch this space to see what happens.
Find out more about switching to a Lifetime ISA
As an officer in the Metropolitan Police, you probably don't have a lot of time on your hands to be researching this subject, but Metfriendly can help.
We all know that saving up for the deposit on a first home can be a major challenge, especially in the London area, so read our article if you would like some tips.