At Friends Capital, we’re always looking for ways to help first-time buyers get on the property ladder faster and smarter. One option many people overlook is the Lifetime ISA – a savings product that offers a generous 25% government bonus each year.
If you’re aged between 18 and 39, this could be one of the most powerful savings tools available to help you purchase your first home or prepare for retirement.
In this article, we’ll explain how the Lifetime ISA works, what the rules are, the pros and cons, and how you can make the most of it when planning your next move.
A Lifetime ISA (LISA) is a type of savings account launched by the government in 2017. It’s designed to help people save either for their first home or for retirement.
It’s tax-free, and if used correctly, could add thousands to your savings.
Every pound you put into a Lifetime ISA gets a 25% top-up from the government. Here's an example:
You can contribute until the age of 50. That means if you open the account at 18 and save the full amount every year, you could get up to £33,000 in government bonuses.
You’ll need to meet the following criteria:
There are only two ways to withdraw from a Lifetime ISA without penalty:
Any other withdrawal triggers a 25% government penalty, which doesn’t just take back the bonus – it can eat into your savings too. For example:
That’s less than what you put in. So, use the LISA only if you're confident you'll use it for your first home or retirement.
There are two types:
Cash Lifetime ISA
Stocks and Shares Lifetime ISA
At Friends Capital, we typically recommend Cash LISAs for first-time buyers aiming to purchase in the near future. You don’t want investment market dips impacting your house deposit.
One downside is that not many providers offer LISAs. But there are some:
It’s worth comparing rates and fees. For Cash LISAs, look for competitive interest rates. For Stocks & Shares LISAs, check for low fees and good fund performance.
Yes, you can move your LISA to another provider. Just make sure you:
You cannot open a new Lifetime ISA after your 40th birthday. However:
The Help to Buy ISA was another government scheme for first-time buyers. However:
If you still have a Help to Buy ISA and haven’t used it yet, speak to us at Friends Capital. In many cases, transferring to a Lifetime ISA could provide a higher bonus and more flexibility.
This comes up often, particularly for the self-employed or those without a workplace pension.
You can have both, and it may make sense to use a LISA for flexibility, particularly if you're not hitting your pension contribution limits.
Absolutely. At Friends Capital, we work with first-time buyers who use their Lifetime ISA as part of their deposit. Just be sure:
The process takes a bit more planning, but it’s well worth it for the extra 25%.
The Lifetime ISA is a brilliant opportunity for those who are eligible. But like any financial product, it needs to be used strategically. At Friends Capital, we’ve seen clients who were able to boost their deposits significantly by starting a LISA early and contributing consistently.
If you’re serious about buying your first home and fall within the age bracket, opening a Lifetime ISA could be one of the smartest financial decisions you make.
Need help navigating your mortgage options or understanding how your LISA fits into your property plans? Get in touch with us at Friends Capital, and we’ll walk you through it step-by-step.
Let’s talk about your deposit goals, Lifetime ISA options, and the best mortgage solutions available to you. Contact Friends Capital today for expert, jargon-free advice.