FIRST-TIME buyers have been stung to the collective tune of £9million for dipping into their Lifetime Isa (Lisa) early.
That's according to a new Freedom of Information request from financial provider Royal London.
It found the government pocketed £4.35million from Lisa withdrawals in the 2018/19 financial year, followed by £4.69million in the first seven months of 2019/20.
And it reckons that's an average fee of £973 per person based on the 166,000 people who took out a Lisa in 2017/18 (the latest figures available), and the average deposit of £3,114 (boosted to £3,893 with the government's 25 per cent top-up).
Lisas are individual savings accounts introduced in April 2017 for people aged 18 to 40 who are either savings for their first home or for a pension.
You can put in up to £4,000 each year, until you’re 50 and the government will add a 25 per cent bonus on top, up to a maximum of £1,000 per year.
What help is out there for first-time buyers?
GETTING on the property ladder can feel like a daunting task but there are schemes out there to help first-time buyers have their own home.
Help to Buy equity loan - The Government will lend you up to 20 per cent of the home's value - or 40 per cent in London - after you've put down a five per cent deposit. The loan is on top of a normal mortgage but it can only be used to buy a new build property. You can no longer open a new account, but existing account holders have until December 1 2030 to claim the bonus.
Lifetime Isa - This is another Government scheme that gives anyone aged 18 to 39 the chance to save tax-free and get a bonus of up to £32,000 towards their first home. You can save up to £4,000 a year and the Government will add 25 per cent on top.
Shared ownership - Co-owning with a housing association means you can buy a part of the property and pay rent on the remaining amount. You can buy anything from 25 to 75 per cent of the property but you're restricted to specific ones.
"First dibs" in London - London Mayor Sadiq Khan is working on a scheme that will restrict sales of all new-build homes in the capital up to £350,000 to UK buyers for three months before any overseas marketing can take place.
Starter Home Initiative - A Government scheme that will see 200,000 new-build homes in England sold to first-time buyers with a 20 per cent discount by 2020. To receive updates on the progress of these homes you can register your interest on the Starter Homes website.
But crucially, you can only withdraw money from a Lisa if you're buying your first home, you're aged 60 or over, or you're terminally ill with less than 12 months to live.
Take cash out for any other reason and you'll be slapped with a 25 per cent charge on the amount taken out.
In addition, any bonus earned on this amount will also be taken back.
So say you save £1,000 get a £250 bonus, you'll have £1,250 in total. But if you then withdraw the cash you'll be hit with a 25 per cent penalty of £312.50 - so you'd get £937.50 back.
Steve Webb, director of policy at Royal London said: "A Lifetime Isa can be attractive for those who are clear about their plans to put down a deposit on a house and who are confident that they won’t need the money for any other reason.
"But these figures are a stark reminder that things can change. People who change their plans after saving in a Lisa are finding that not only do they have to pay back the government top-up but they face a penalty charge as well.
"This leaves them with less money than they started with."
The Treasury told The Sun it believes its information on fees is clear. It states online: “The withdrawal charge aims to recover the government bonus received and apply an extra charge to the original savings.
"This means if you treat your Lifetime Isa as a short-term savings product, you could get back less than you paid in.”
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If you're thinking of getting a Lisa, we've rounded-up the top providers.
Meanwhile earlier this week, the Queen’s Speech promised first-time buyer discounts of 30 per cent on homes near where they grew up.
For more on first-time buyers, check our our My First Home series.