A Lifetime ISA is a savings or investment product, not a mortgage. Investment values can fall. Check provider charges and obtain regulated financial advice where appropriate. Your home may be repossessed if you do not keep up mortgage repayments.
Current rules at a glance
| Opening age | Age 18 to 39; the first payment must be made before age 40 |
|---|---|
| Annual contribution | Up to £4,000 each tax year, within the overall ISA allowance |
| Government bonus | 25%, up to £1,000 for a full £4,000 annual contribution |
| First-home price | £450,000 or less |
| Waiting period | At least 12 months after the first payment |
| Other withdrawals | Normally a 25% withdrawal charge before age 60 unless a permitted exception applies |
Conditions for a first-home withdrawal
GOV.UK says all of the following must apply:
- you are buying your first home and the property costs £450,000 or less;
- the purchase is at least 12 months after the first payment into the Lifetime ISA;
- you are buying with a mortgage; and
- the provider pays the funds directly to the conveyancer or solicitor acting on the purchase.
Two eligible first-time buyers can each use a Lifetime ISA on the same purchase. If you also hold a Help to Buy ISA, only one government bonus can be used for that purchase.
Understand the withdrawal charge
The charge is 25% of the amount withdrawn, including the government bonus. With no growth, a £4,000 contribution becomes £5,000 after the bonus; an unauthorised full withdrawal leaves £3,750 after a £1,250 charge. That is £250 less than the original contribution.
The risk matters if the eventual home may cost more than £450,000, the purchase could happen inside 12 months, or the money might be needed for another purpose. Keep emergency savings outside a Lifetime ISA.
Cash or stocks and shares?
A Lifetime ISA can hold cash, investments or both. Cash avoids market-value movements but providers offer different interest rates and terms. Investments can fall just before a purchase and have platform or fund charges. Match the risk to the likely purchase date and obtain investment advice if needed; this mortgage guide does not recommend a provider or asset allocation.
Proposed First Time Buyer ISA
HM Treasury opened a consultation on 23 June 2026 about a proposed First Time Buyer ISA that would eventually be offered in place of the Lifetime ISA. At this review date, the consultation is not a final product specification. Launch timing, transition rules and detailed terms should not be treated as settled until the government publishes a final response and legislation.
Before relying on the account
- 1. Check the dates. Record the first-payment date and expected completion date.
- 2. Test the price cap. Leave room if the target property or location may exceed £450,000.
- 3. Compare providers. Review rates, investment risk, fees, transfer terms and withdrawal processing.
- 4. Tell the conveyancer early. They must request the funds through the scheme process.
- 5. Keep the mortgage separate. A Lifetime ISA bonus does not establish mortgage affordability or approval.
Planning a first-home mortgage?
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