The Lifetime ISA offers first-time buyers a free 25% bonus on savings up to £4,000 per year. That's up to £1,000 in free money annually from the government. Here's everything you need to know.
How the Lifetime ISA Works
- Save up to £4,000 per tax year
- Government adds 25% bonus (up to £1,000)
- Use for first home or retirement (age 60+)
- Available ages 18-39
- Property must be under £450,000
ℹ️ The Maths
Save £4,000 → Get £1,000 bonus = £5,000 total Save for 5 years: £20,000 + £5,000 bonus = £25,000
Eligibility Requirements
- Age 18-39 when you open the account
- UK resident
- First-time buyer (never owned property worldwide)
- Property must cost £450,000 or less
- Must be your main residence
- Must buy with a mortgage
LISA vs Help to Buy ISA
Help to Buy ISAs are closed to new applicants. If you have one:
- You can have both LISA and Help to Buy ISA
- But can only use ONE bonus per property purchase
- LISA generally better due to higher limits
Calculate Your House Deposit
Use our savings calculator to see how fast you can save with LISA bonuses.
Cash LISA vs Stocks and Shares LISA
Cash LISA
- Fixed or variable interest rate
- Lower risk—money is stable
- Better for short-term (under 5 years)
Stocks and Shares LISA
- Invested in markets
- Potential for higher returns
- Value can fall as well as rise
- Better for longer timeframes (5+ years)
The Withdrawal Penalty
⚠️ Warning
If you withdraw for any reason other than first home or retirement, you lose 25% of the total amount withdrawn. This is MORE than the bonus—you'll lose some of your own money too.
How to Open a LISA
- Compare providers (Moneybox, AJ Bell, Hargreaves Lansdown, etc.)
- Choose Cash or Stocks & Shares
- Open before your 40th birthday
- Start saving—even £1 activates the account
- Set up regular contributions
When LISA Isn't Right
- You might buy a property over £450,000
- You need access to savings before buying
- You might not buy in the UK
- You might inherit property (no longer first-time buyer)
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