TL;DR
In short
- You can open a Lifetime ISA (LISA) when you are 18 to 39 and make your first payment before 40; you normally need to be UK resident, with limited Crown-service exceptions.
- You can pay in up to £4,000 each tax year before 50. It counts towards the £20,000 ISA allowance for 2026/27, and a 25% government bonus can add up to £1,000.
- For a charge-free first-home withdrawal, the property must be in the UK, cost £450,000 or less and be your intended main residence; other conditions also apply.
- An unauthorised withdrawal normally has a 25% charge on the amount withdrawn, including the bonus, so you may receive less than you paid in.
- In a joint purchase, each person using a LISA must qualify independently; you may buy with someone who has owned before, but the £450,000 cap applies to the whole property.
This guide explains the current Lifetime ISA rules for saving towards a first home. A LISA can be useful for some savers, but the rules on eligibility, withdrawals and property purchases matter as much as the bonus.
The Lifetime ISA can form part of a first-home deposit, subject to its rules.
You can also read about home-buying schemes in England and saving for a mortgage deposit.
What is a Lifetime ISA?
A Lifetime ISA (Individual Savings Account, or LISA) is an ISA designed for first-home saving or later life. You can open one from age 18 to 39, provided your first payment is made before you turn 40. You normally need to be UK resident to open one and to keep paying in. There are limited exceptions for qualifying Crown employees serving overseas and their spouses or civil partners. GOV.UK explains who can open a LISA and the residence rules.
You may pay in up to £4,000 in each tax year before age 50. This uses part of the £20,000 overall ISA allowance for 2026/27. The government adds a 25% bonus, up to £1,000 for that tax year; the bonus itself does not use ISA allowance. At 50, new contributions and new bonuses stop, but the account remains open. A LISA can hold cash, stocks and shares, or both. Cash interest and investment returns are not guaranteed, and the value of investments can fall. GOV.UK’s LISA overview and MoneyHelper’s guide set out these limits.
Why should you consider a LISA?
The bonus may help someone whose savings target, expected purchase timing and access needs fit the scheme. It does not decide whether a property is affordable, whether a mortgage will be offered or how much deposit a lender will require. Consider the withdrawal rules before paying in, especially if you may need the money for another purpose.
Lifetime ISA withdrawals
You can normally withdraw money without a withdrawal charge when you are 60 or over, are terminally ill, or make a qualifying first-home purchase. A terminal-illness withdrawal requires written medical evidence for your provider that you have less than 12 months to live. HMRC’s guidance on terminal illness explains the evidence requirement.
For another withdrawal, the usual charge is 25% of the gross amount taken out, including the government bonus. For example, if you paid in £4,000 and received a £1,000 bonus, the pot would be £5,000 before any returns or fees. A 25% charge is £1,250, leaving £3,750 — £250 less than the original contribution. First-time-buyer status on its own does not make a withdrawal charge-free: the purchase must meet the full conditions below. See GOV.UK’s withdrawal guidance and HMRC’s guidance on charges and exceptions.
Lifetime ISA terms and conditions when buying a property
To use a LISA for a first home without the usual charge, you must meet all of the ordinary conditions:
- You have never owned a residential property anywhere in the world.
- The property is in the UK, costs £450,000 or less, and is intended to be your only or main residence.
- At least 12 months have passed since your first LISA payment.
- You are using an eligible conveyancer or solicitor, who receives the LISA funds directly from the provider.
- The purchase is financed with a mortgage. A legal mortgage from a connected person does not qualify.
These conditions mean that an investment property or holiday home will not usually qualify. Owning a property through an inheritance or gift is not automatically disregarded because you never bought it; if beneficial ownership is unusual, check the position with your conveyancer. HMRC’s first-time residential purchase guidance explains the rules.
Crown-service exception
A qualifying Crown employee serving overseas, or their spouse or civil partner, may be able to let the home temporarily until returning to occupy it. This is a narrow exception, so check the relevant HMRC declaration guidance with the conveyancer.
Each buyer who wants to use a LISA must meet the conditions independently. You can buy jointly with someone who has owned a home before, but only the eligible LISA holder can use their own LISA funds. The £450,000 cap applies to the whole property, not to each buyer’s share. Read more about a joint mortgage and check the transaction with your conveyancer.
The conveyancer normally has 90 days from receiving the LISA funds to complete the purchase, with possible extensions in some circumstances. If the purchase fails, the funds normally need to return to the provider; a shortfall can lead to a charge. HMRC’s conveyancer guidance has the process details. You cannot claim both a Help to Buy ISA bonus and a LISA bonus for the same home purchase. GOV.UK explains the withdrawal rules.
Proposed changes to the LISA
The First Time Buyer ISA consultation closed on 18 August 2026. It is a consultation and proposal, not a change to the current LISA rules. As at 20 September 2026, the Treasury was considering responses; existing LISA rules continue to apply, and future terms have not been confirmed.
Summary
If you are planning a home purchase, Extend Finance can discuss your mortgage options. A mortgage application remains subject to the lender’s affordability assessment and lending criteria.
FAQ
Frequently asked questions
Who can open a Lifetime ISA?
A LISA can be opened by someone aged 18 to 39 who makes their first payment before turning 40. You normally need to be UK resident, with limited exceptions for qualifying Crown employees abroad and their spouses or civil partners. It can be used for a qualifying first home or accessed from age 60.
How much can I pay into a LISA and what is the bonus?
You can pay in up to £4,000 per tax year before age 50. This counts towards the £20,000 ISA allowance for 2026/27. The government bonus is 25%, so it can add up to £1,000 in that tax year; the bonus does not use your ISA allowance.
What first-home conditions apply to a LISA withdrawal?
You must never have owned a residential property anywhere in the world. The home must be in the UK, cost no more than £450,000 and be your intended only or main residence. At least 12 months must have passed since your first LISA payment, and the funds must be handled by an eligible conveyancer or solicitor as part of a mortgage-financed purchase.
What happens if I withdraw from a LISA early?
A withdrawal that is not for a qualifying first home, age 60 or over, terminal illness, or another listed exception normally has a 25% charge on the amount withdrawn. Because the charge includes the bonus, it can leave you with less than your original contributions.
Can I use a LISA when buying with someone who has owned a home before?
Yes, if you meet all LISA conditions yourself. The other buyer does not need to be a first-time buyer for you to use your own qualifying LISA withdrawal, but the £450,000 cap applies to the property as a whole and their previous ownership does not make them eligible to use a LISA.
