Lifetime ISA

A Lifetime ISA is designed to help first-time buyers save for their first home with the added benefit of a government bonus. To take advantage of this scheme, you’ll need to meet certain criteria:

• You must be aged between 18 and 39 to open an account, though you can continue saving until you’re 50.
• You must be a UK resident.
• The funds can only be used for buying your first home or saved for later life.
• The property you purchase must be worth £450,000 or less.
• Your Lifetime ISA must be open for at least 12 months before you can use the funds.
• The home must be bought with a mortgage.
• A solicitor or conveyancer must handle the purchase.

If you’re thinking about using a Lifetime ISA to buy your first home, our mortgage advisors can talk you through your options.

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A Lifetime ISA can be a great way to build up your savings if you’re a first time buyer. The 25% government bonus on your contributions gives you extra money towards your deposit.

If you save the full £4,000 allowed each tax year, you will receive up to £1,000 extra from the government, which can make a real difference when buying a home. This equates to a total of £5,000 saving per year.

That said, a Lifetime ISA is not for everyone. The funds must be used for a first home or kept until later in life, and withdrawing money for any other reason will result in a penalty.

If you are unsure whether this is the best option for you, speaking to a mortgage advisor can help you understand how it fits into your home-buying plans.

You can withdraw money from your Lifetime ISA, but there are restrictions on how and when you can access your funds.

If you are buying your first home and meet the scheme’s criteria, the money, including the government bonus, will be sent directly to your solicitor to put towards your deposit.

If you withdraw for any other reason before the age of 60, a 25% government withdrawal charge will apply. This means you could get back less than you originally put in.

The only exceptions to this penalty are if you are using the funds to buy your first home or in cases of terminal illness.

Yes, the government adds a 25% bonus to your Lifetime ISA savings each year, based on the amount you contribute. You can deposit up to £4,000 per tax year, meaning you could receive up to £1,000 in bonus payments annually.

The bonus is calculated based on your savings over a set period and is then added to your account the following month. If you’re planning to use your Lifetime ISA to buy a home, it’s important to factor in this timing.

Our mortgage advisors can help you understand how it fits into your home-buying plans.

When you’re ready to buy your first home, you’ll need to notify your Lifetime ISA provider that you’re using the funds for a property purchase. This can usually be done through their online portal or mobile app, making the process quick and straightforward.

Once your request is approved, the provider will transfer the money, including the government bonus, directly to your solicitor or conveyancer. This ensures the funds go towards your deposit as part of the home-buying process.

Your Lifetime ISA must have been open for at least 12 months before you can withdraw funds for a home purchase. The property must also meet the scheme’s criteria, including being worth £450,000 or less and being bought with a mortgage.

A Lifetime ISA is available to those looking to save towards their first home or later life. To open one, you must meet the following criteria:

• Be aged between 18 and 39 when opening the account.
• Be a UK resident for tax purposes.

Once opened, you can continue contributing to your Lifetime ISA until you turn 50, benefiting from the government’s 25% bonus on savings of up to £4,000 per tax year.

If you are planning to use it for a home purchase, the property must meet the scheme’s conditions, and the funds must be used alongside a mortgage.

You can save up to £4,000 each tax year in a Lifetime ISA, with the government adding a 25% bonus on top. This means you could receive up to £1,000 in bonus payments annually, giving your savings an extra boost towards your first home.

The £4,000 allowance is part of your overall £20,000 annual ISA limit. If you have other ISAs, such as a Cash ISA or Stocks and Shares ISA, your total contributions across all accounts cannot exceed this limit.

No, a Lifetime ISA is an individual savings account, so it cannot be opened or held jointly. Each person must have their own account in their own name.

However, if you are buying a home with a partner, both of you can use your Lifetime ISA savings towards the same property, as long as you both meet the scheme’s criteria. This means you could combine your deposits and benefit from two government bonuses, giving you even more towards your first home.

Some Lifetime ISA providers allow you to link accounts within their app, so you and your partner can track your savings progress together. This can be a useful way to stay on top of your combined deposit amount.

Not all banks offer a Lifetime ISA, as it is a specialised type of savings account. While some banks provide them, they are more commonly available through building societies and investment platforms.

You can choose between a Cash Lifetime ISA, where your savings earn interest or a Stocks and Shares Lifetime ISA, which invests your money with the potential for higher returns but also carries risk.

If you are considering a Lifetime ISA to help with your first home purchase, it’s worth comparing providers to find the best option for your savings.

When the time comes to buy, our mortgage advisors can help you understand how your Lifetime ISA fits into your mortgage plans.

Yes, you can deposit a lump sum into a Lifetime ISA, as long as it does not exceed the annual limit of £4,000. Some people prefer to contribute a lump sum at the start of the tax year to maximise interest or investment growth, while others add funds gradually over time.

The government will still add the 25% bonus based on the amount you contribute, whether you deposit the full amount in one go or spread it out across the year. However, once you hit the £4,000 limit, you will need to wait until the next tax year to add more.

The Help to Buy ISA and Lifetime ISA were both designed to help first-time buyers save for a deposit, but there are key differences between them.

The Help to Buy ISA is no longer available to new applicants, as the scheme closed to new savers in 2019. If you already have one, you can continue saving into it until November 2029 and claim the 25% government bonus when buying your first home. However, the bonus is only applied at the point of completion, meaning it cannot be used towards your initial deposit.

A Lifetime ISA is still open to new applicants and allows you to save up to £4,000 per tax year, with the government adding a 25% bonus. Unlike the Help to Buy ISA, the bonus is added monthly and can be used towards your deposit when you exchange contracts.

The Lifetime ISA also has a higher property price cap of £450,000, regardless of location, whereas the Help to Buy ISA had a £250,000 limit (£450,000 in London).

No, the Lifetime ISA is still open to new applicants. As long as you are aged between 18 and 39 and meet the eligibility criteria, you can open an account and start saving towards your first home.

Once your Lifetime ISA is open, you can continue saving into it until you turn 50, benefiting from the government’s 25% bonus on savings of up to £4,000 per tax year. However, to use the funds for a home purchase, your account must be open for at least 12 months before making a withdrawal.

No, only the account holder can make payments into a Lifetime ISA. The money must come from your own personal funds, meaning family or friends cannot pay directly into your account.

However, if a family member wants to support your home-buying journey, they may be able to provide a gifted deposit instead. This is a lump sum of money given to you to put towards your deposit, with no expectation of repayment.

A gifted deposit does not go into your Lifetime ISA, but it can be used alongside it to increase the amount you have available when securing a mortgage.

Yes, you can still use your Lifetime ISA towards a property purchase, even if the person you’re buying with has owned a home before.

However, they won’t be able to use a Lifetime ISA themselves, as the scheme is only available to first time buyers.

Yes, but if you withdraw funds for anything other than buying a first home or after turning 60, a 25% government withdrawal charge applies.

This means you’ll lose some of your savings, including part of what you originally deposited.