Lifetime ISA

You can use a Lifetime ISA (Individual Savings Account) to buy your first home. You must be 18 or over but under 40 to open a Lifetime ISA. You can then put in up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40. The government will subsequently add a 25% bonus to your savings, up to a maximum of £1,000 per year.

Withdrawing your money from your lifetime ISA

You can withdraw money from your ISA if you’re:

• buying your first home
• aged 60 or over
• terminally ill, with less than 12 months to live

An example to consider

Assuming no growth, initial savings of £800 will earn a 25% government bonus of £200 and give you a pot of £1,000. If you wish to withdraw the entire pot, a 25% charge will apply to the full £1,000. You’ll have to pay a government withdrawal charge of £250. This will leave you with £750.

Using funds to buy your first home

You can use your savings to help you buy your first home if all the following apply:

• the property costs £450,000 or less
• you buy the property at least 12 months after you make your first payment into the Lifetime ISA
• you use a conveyancer or solicitor to act for you in the purchase – the ISA provider will pay the funds directly to them
• you’re buying with a mortgage

Buying with someone else

If the person you’re buying with has a Lifetime ISA, they can use their savings and government bonus too. That’s great news – double the benefit!

As there are conditions attached to a Lifetime ISA we would recommend that you talk to your provider for a full summary of the terms and conditions connected with this type of product.