Lifetime ISA explained: free money for your first home

The Lifetime ISA (LISA) is the most generous savings product most first-time buyers will ever use: save up to £4,000 a year and the government adds 25% - up to £1,000 of free money every year. Over three years of maxing it out, that’s £15,000 saved plus £3,750 in bonuses.

How it works

• Open it between ages 18 and 39 (you can keep paying in until 50)
• Save up to £4,000 per tax year - cash or stocks and shares
• The government adds 25% on top, paid within weeks
• Withdraw tax-free for your first home (up to £450,000) or at age 60+
• The account must be open 12 months before you use the bonus for a home

The traps

• The 25% withdrawal charge. Use the money for anything other than a first home or retirement and you pay 25% of the amount withdrawn - you lose the bonus and a slice of your own money. (The charge was reduced in April 2025, but it still bites.)
• The £450,000 cap. The home must cost £450,000 or less. Over that, you can’t use the LISA for it - and in London or the South East that rules out many homes.
• The 12-month rule. Open the account at least a year before you plan to buy, or the bonus isn’t available for the purchase.
• First-time buyer only. If you’ve ever owned a home anywhere in the world, you can’t use a LISA for a purchase (though you can still use it for retirement).

LISA vs Help to Buy ISA

How to use it when buying

Tell your conveyancer early that you’re using a LISA - they handle the bonus claim with the provider as part of the purchase. The bonus can go towards the deposit or the purchase itself (the money transfers on completion). If you buy with a partner, each of you can use their own LISA, as long as you’re both first-time buyers.

Source: GOV.UK - Lifetime ISA — Rules checked August 2026

Source: MoneyHelper - Lifetime ISA — Bonus and withdrawal guidance checked August 2026