Martin Lewis was back on-air on Wednesday (March 8) for the latest edition of his BBC podcast. The self-titled show, The Martin Lewis Podcast, is released on BBC sounds each week and focuses on a different subject matter.
This week's episode was centered around ISAs with the Money Saving Expert founder answer questions from viewers, whilst also giving his best advice on a range of other topics including cheap flights and pension boosts.
During the ISA talk Martin, 50, gave some key advice to first-time buyers who are currently saving up to buy their first house. The finance guru talked about the Lifetime ISA (LISA) and explained how this can help prospective new homeowners boost their savings by 25 percent.
READ MORE:
Speaking on the latest Martin Lewis podcast, the finance guru explained: "Lifetime ISAs can only be opened if you are aged 18 to 39. You can put up to £4,000 per tax year into savings or investments within a LISA, and then when you use it to buy a first-time property, you get a 25 percent free bonus from the state."
Martin explained that this means that for every £4,000 you save every year, you would get £1,000 free from the government to use towards buying you first home.
But there are further rules and requirements as to who can save with a LISA, as Martin added: "You must have never owned a home before for that to work. The home that you're buying must cost under £450,000 and you cannot use the 25 percent bonus until your Lifetime ISA has been opened for a year."
Martin then advised that even if you are not planning to save for your first home right now, it's a good idea to open a LISA either way.
"If you are between 18 and 39 and you have never bought a home, go and open a Lifetime ISA with £1 now because then you've started the clock. Then if in two years time when you come to use it, you can put £4,000 in that day and you would be entitled straight away for the bonus to use on a first-time property.
"You have to have had it open for a year to be able to get the bonus, so you may as well get that clock ticking."
Despite the obvious benefits of the LISA, Martin warned that there are some downfalls to it.
Martin explained that because there is a £450,000 limit on the price of a home you can buy with a LISA, many first-time buyers are losing money due to house prices rising, as the homes they're buying are out of this threshold.
You then have to pay a penalty for taking the money out if you are going to put it towards buying a home that doesn't qualify.
Martin said: "It's time the outdated rules were updated. A £450,00 home limit hasn't moved since launch at 2017 even though house prices have risen 35%."
He has since written to the Chancellor Jeremy Hunt to ask him to either stop the withdrawal penalty for those buying homes that no longer qualify or to increase value of qualifying house.
Sign up to our free weekly property newsletter by clicking here
READ NEXT:
First-time buyers have just weeks left to take advantage of government loan scheme
Immaculate three-bed terrace in Greater Manchester with bargain price tag
'We gave our £265,000 period property a quirky makeover - now we've got a disco office'
Inside the incredible house in Greater Manchester with its own Love Island villa-style garden
This is what you can buy across Manchester for the average house price of £220,000
