New ISA product for first-time buyers

In June, the government launched a consultation on the implementation of a new Individual Savings Account (ISA) product to support first-time buyers (FTBs).

The FTB ISA is due to be introduced in April 2028 and, once available, is intended to replace the Lifetime ISA (LISA). A key difference between the two products is that the new FTB ISA will have no upper age limit. Currently, you have to be under 40 to open a LISA, but the FTB ISA will be available to any new homeowner over the age of 18. Also, savers will be able to withdraw cash from the FTB ISA without a penalty, whereas there is currently a 25% charge on ineligible withdrawals or transfers from a LISA. 

If you have a LISA, currently you receive a 25% bonus from the government each month. With the new FTB ISA, the bonus will be paid as a lump sum at the point of purchase, so savers will not be able to accrue interest on the bonus. The government has yet to announce what percentage of bonus it will pay on the FTB ISA and how much you will be able to save each year.

Savers can still open LISAs until 2028 and continue making contributions after the new product is launched.

Your home may be repossessed if you do not keep up repayments on your mortgage

Sources: https://www.gov.uk/government/consultations/first-time-buyer-isa-consultation

https://www.moneysavingexpert.com/savings/first-time-buyer-isa/