Lifetime ISA

If you’ve owned a property before – whether inside or outside the UK – you can’t use a LISA towards a home purchase.

You can save up to £4,000 a year in it, towards your first home, you get a 25% bonus each tax year on up to £4,000. The bonus is paid every year you save something into your LISA, until you hit age 50.

You must be buying a residential UK property to live in that costs £450,000 or less.  You will cash in the LISA when you buy your first home to use towards a deposit

You need to have had a LISA open for a year to be able to use it (and the bonus) towards your first home.

You only get the bonus on contributions, not cash interest or investment growth.

The maximum bonus is £33,000 if you open it at 18, and max it out until you hit 50 (unless you’re born on 6 April, when the max is £32,000).

You must be aged 18 or over but under 40 when you open a Lifetime ISA

If you want to transfer it to a new provider, for example to get a better interest rate, this is allowed – and you can add to it then. You just can’t open another for new money only.

Your interest (or investment growth) is tax-free in a Lifetime ISA

Withdrawals have a 25% penalty, withdrawing for reasons other than buying your first home you 6.25% of what you contributed.

The LISA is intended to help you buy your first home, so you’re not supposed to rent it out immediately after buying it (though you can if your circumstances change down the line).

You can get the money in time for exchange on your property, meaning you can use it towards the deposit requested by the person you’re buying from (the exchange deposit), as well as the deposit the mortgage company will want on the property at completion. See the difference between these.