Lifetime ISA planner
How far the 25% LISA bonus gets your deposit — and the cap to watch.
Lifetime ISA rules: you must be 18–39 to open one (contributions allowed to age 50), the account must be open 12+ months before you buy, and the home must cost £450,000 or less. Withdrawing for anything other than a first home (or age 60) costs a 25% penalty — roughly a 6.25% loss of your own money. Figures exclude interest or investment growth. Illustration only, not financial advice.
A Lifetime ISA is the most generous deposit-building scheme available to most first-time buyers: pay in up to £4,000 per tax year and the government adds 25%, up to £1,000 a year, on top of any interest or investment growth. You can open one between 18 and 39 and keep paying in until 50. Save the full £4,000 a year for five years and you have £25,000 before growth — £5,000 of it free money.
The conditions are strict and worth knowing before you commit. The bonus is only withdrawable penalty-free for a first home costing £450,000 or less, bought with a mortgage, at least 12 months after your first payment in — or from age 60. The £450,000 cap has not risen since the scheme launched in 2017, which is a genuine problem in London and parts of the South East: if your likely purchase price is near or above it, weigh the LISA carefully before locking money in.
The withdrawal penalty is harsher than it sounds. Taking money out for any other reason costs 25% of the amount withdrawn — which claws back more than the bonus. Pay in £1,000, receive £250 bonus, then withdraw the £1,250 and the charge is £312.50: you get back £937.50, a 6.25% loss on your own money. Couples buying together can each use their own LISA on the same purchase, provided both are first-time buyers, doubling the bonus. Illustration, not advice.
Common questions
How much is the Lifetime ISA bonus worth?
25% of what you pay in, up to £1,000 per tax year (on the maximum £4,000 contribution). The bonus is paid monthly and itself earns interest or growth. Five years of maximum contributions produce £25,000 before growth; a couple both saving the maximum get to £50,000.
What is the LISA property price cap?
£450,000, anywhere in the UK, unchanged since 2017. Pay even £1 over and the purchase does not qualify — you would have to withdraw with the 25% penalty to use the money. If you are likely to buy near the cap, check local prices honestly before relying on a LISA.
What happens if I withdraw from a LISA early?
A 25% charge on the amount withdrawn, unless it is for a qualifying first home (£450,000 or less, with a mortgage, account open 12+ months), from age 60, or terminal illness. The charge exceeds the bonus: you lose 6.25% of your own contributions. A LISA is a commitment, not a flexible savings account.
Can my partner and I both use LISAs for the same house?
Yes — each qualifying first-time buyer can put their own LISA (with bonus) towards a joint purchase under £450,000. If one of you has owned property before, the other can still use theirs. Both accounts need to have been open at least 12 months, so open early even with £1.
Cash LISA or stocks-and-shares LISA?
The usual horizon rule: buying within about five years favours cash (no risk of a market dip just before you exchange); longer horizons can justify investing. Whichever you choose, the 25% bonus works the same. You can transfer between LISA providers without losing it.
Numbers are half the story. Check the home itself.
One search pulls the official record on any address in England & Wales — value, flood risk, schools, noise and more, scored 0–100.