Martin Lewis shared details on how to secure £1,000 a month for free by using a specific savings account.
By using a Lifetime ISA (LISA) account, you earn a 25% bonus on all of your savings. The maximum deposit amount each tax year is £4,000 which means an annual bonus of £1,000.
The bonus isn't affected by a minimum amount which means it will still be applied to whatever total the LISA holds but the money must be spent on either a first property or retirement fund. If you withdraw cash for any reason, you will pay a 25% penalty.
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You can open a LISA if you’re aged between 18 to 39 although you can keep saving into an existing account until your 50th birthday. The maximum bonus you can pocket from the Government is £33,000 if you open your LISA at the age of 18, and max it out until you hit 50, the Mirror reported.
This is unless you're born on April 6, in which case the biggest bonus is £32,000. During his Martin Lewis Money Show Live, Martin said: "The state will give you a 25% boost on the money you put in. You can put in up to £4,000 a year so that’s up to £1,000 a year bonus from the state."
If you’re opening a LISA with the intention of saving for your first home, you’ll need to have the account for at least one year before you get any bonus. You also need to keep in mind that the total property value you can buy with the help of a LISA must not exceed £450,000.
Martin added: "Do be careful if you think the house you could buy could be above a £450,000 maximum LISA house." He wrote to Chancellor Jeremy Hunt this week to call for the LISA penalty to be removed, or the property value threshold to be increased.
He said: "The LISA £450,000 [limit] hasn’t gone up since 2017. They should either wipe the penalty for people buying bigger [homes] or put that £450,000 up. Not the subject for today but I hope to hear back from the Chancellor on that because I don’t think it’s that fair."
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