Property > Buying
Lifetime ISA for Buying Your First Home
One of the two uses of a Lifetime ISA (LISA) is to help you buy your first home. When doing so, however, there are a few factors to consider.
If you’re unsure of what a LISA is, the eligibility criteria or the withdrawal charges, please head to our guide below to explain first.
Lifetime ISA Rules
As we’ve mentioned, one of the main benefits of a LISA is to save for your first home. This does, however, come with a few conditions:
- First, you must have never owned a property before...anywhere!
You must be a first-time buyer to put your LISA towards a home.
- The property you are buying must cost £450,000 or less and be located in the UK
If purchasing with others, you can save up in separate LISAs and put it towards the house, as long as the property still costs £450,000 or less. Unfortunately, if you and your partner use both of your LISAs towards a new home, the £450,000 limit still applies.
- You must be buying the property to live in
The ISA is designed to help you buy your first home to live in, and therefore, you cannot purchase a property utilising your LISA in which you intend to let out. The property can be rented out if your circumstances change down the line however, when utilising the ISA for purchasing, it must be with the full intent of living in the property.
- Your LISA will only be able to be used 12 months after your first deposit into the LISA account
- If you intend to buy a house within the next 12 months and haven’t made a deposit into a LISA, then opening a LISA is unlikely to be the best option for you
- If you haven’t opened one yet and are unsure whether you want to utilise a LISA, it’s worth sticking £1 into one to get the clock ticking on your 12 months. If you don’t end up using it, you can withdraw 93p and move on
- You must be using a conveyancer or solicitor for the purchase
Why? Your ISA provider will send the money with your LISA to them directly; you don’t personally handle it.
- You must be buying a house with a mortgage
Your LISA funds must contribute towards a deposit; therefore, a mortgage is required. If you are buying a property using cash and want to use your LISA funds, you would need to pay the withdrawal charge.
Frequently Asked Questions
Firstly, a Lifetime ISA can only be used 12 months after your first deposit into the account. For this reason, transferring is only really an option for those who can ensure they have fulfilled this requirement.
A Lifetime ISA generally comes with more benefits:
Deposit Cap:
You can deposit lump sums into a Lifetime ISA (up to £4,000 per year), whereas a Help to Buy is only £200 per month and has a total contribution limit of £12,000.
Bigger Bonus:
Due to being able to deposit more into a Lifetime ISA, your 25% bonus will contribute a larger total amount if you max out your contributions each year.
Lifetime ISA max = £4,000 + 25% = £5,000
Help to Buy max = £2,400 + 25% = £3,000
Property Price:
Lifetime ISAs can be used to purchase a property worth up to £450,000 anywhere in the UK, whereas Help to Buy ISAs can be used to buy a property worth up to £250,000 (or £450,000 in London).
You also need to consider that transferring to a Lifetime ISA will count towards your annual £4,000 allowance. If you have more than that in your Help to Buy, then a partial transfer will need to occur, with the remainder being transferred the following year(s).
Note: You can no longer open a Help to Buy ISA. If you already have a Help to Buy, you can pay into the ISA until November 2029. You can claim the 25% bonus until November 2030.
Yes, you can have both a Help to Buy and a Lifetime ISA, however you can only use one to contribute towards your first home.
You can indeed! Once you have withdrawn some, or all, of your LISA savings for your first home, you can then continue to contribute towards your LISA until the age of 50 (still receiving the government bonus). You can then access all of your savings, penalty-free, at the age of 60.
Whichever provider you open your LISA with will claim the government bonus for you and add it to your ISA. They usually do it every month and you should see it in your ISA account 1 to 2 months after the date you put money in.
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