Financial expert Martin Lewis has shared his top tip for converting £1 into £1,000 towards your first home.
Martin has urged people who are saving for a home to open a Lifetime ISA (LISA) account using £1. You can put up to £4,000 into a LISA each tax year.
In return, the Government will pay you a 25% bonus, worth up to £1,000, reports The Mirror. The catch? You can only use the LISA savings towards your first home or retirement.
You also need to have the account open for a year before you can use it – so Martin suggests depositing £1 to get the ball rolling. Speaking during his Martin Lewis Money Show Live on ITV, Martin said: “You put £1 in… the clock is ticking, then when you want to use it, you can add your money in and because it’s been open a year, you can get the bonus.”
There are some other points to be aware of when hoping to use a LISA. One being the value of the house, which cannot exceed £450,000.
Martin urged savers to watch out if they have to withdraw the cash for reasons that aren’t their first home or retirement. This is because a LISA comes with a 25% withdrawal penalty, which wipes out your saving boost and part of your investment.
You must be aged between 18 and 39 to open a LISA, but you can keep saving into your account until you turn 50. If you’re in a couple, you can both open a LISA – which means a potential bonus of up to £2,000 each tax year.
The top rate of savings for a LISA is currently with Moneybox, which offers 4.25%. Martin shared a success story from one viewer who used a LISA to purchase their first property last year.
The message from the viewer read: “I put £1 in back in 2021/22 when this was mentioned, to activate. Started looking in 2022 and completed beginning of 2023. Thankfully I could use the LISA and I got £1,000 for free. Thank you Martin.”
£450,000
