Help to Buy or Lifetime ISA? One scheme offers a £32,000 bonus – don’t miss out

Setting aside money for the future may be a practice that some people find tricky, but it could be very beneficial indeed. As well as building a fund which could help you to invest in a home, stowing away some money each month into a designated account could see you end up with more money. That’s because putting your hard-earned cash into initiatives such as the Help to Buy ISA and Lifetime ISA mean that buyers could be entitled to receive a bonus payment from the government. So, where should you be storing your savings this year?

The Help to Buy ISA

This savings initiative was launched in December 2015.

The bonus scheme is available to all first time buyers, however there are a number of other criteria – such as being a UK resident over the age of 16 – which you and the property you home to purchase must meet.

Should you be eligible, your savings in the account could then be boosted by the government.

In order to set one up, you can deposit a lump sum of up to £1,200 – within the first month.

After opening the account, you can save up to £200 per month in this account.

Provided you have set aside at least £1,600 in the Help to Buy ISA, you will be able to claim the minimum government bonus of £400.

For larger savings, the government will pay more – with the maximum bonus currently standing at £3,000 on this scheme.

In order to access this amount of money, you’d need to have saved £12,000 in the account.

You can apply to receive the bonus from the ISA, which is available from a range of banks, building societies, and credit unions, once you are close to buying your first home – and will be paid once the house purchase is completed.

This means that it cannot be used as part of a deposit for a house.

The Lifetime ISA

The Lifetime ISA, which launched in April 2017, is open to those aged between 18 and 39, and once it’s been set up, can be used right up until you reach the age of 50.

It’s considered to be less strict in comparison to the rules of the Help to Buy ISA, and has a more generous savings allowance of the two schemes.

After opening the account, you can save up to £4,000 each year up until the age of 50.

This counts towards your annual ISA limit, which stands at £20,000 for the 2018 and 2019 tax year.

For the Lifetime ISA scheme, the government will contribute a 25 per cent bonus to your savings, paid on a monthly basis.

However, this payment has a limit of £1,000 per year.

Should you deposit savings into your account each year from the age of 18, this means you could earn up to £32,000 via government payments by the time you reach your 50th birthday.

Help to Buy or Lifetime ISA – which is better?

It’s down to you and your own financial decisions as to which type of ISA you choose.

However, in the long-term, it seems you could earn more bonus payments from the government via the Lifetime ISA.

The latter is also possible to access sooner too, and this may be a very attractive prospect for first-time buyers.

READ MORE: The Help to Buy ISAs to invest in in 2019 – how to gain £3,000 from the government