So, you know what a Lifetime ISA is ✅
And you've heard about the whole 25% bonus thing ✅
But there are still a few things you need to know before opening an account... ⏳
That’s okay! We get it – money stuff can be confusing at the best of times, but we're here to clear things up for you. So, let's get to it. Here are the questions we get asked most about LISAs (and the answers)....
Questions about opening Lifetime ISAs (we sometimes call them LISAs for short)
“Can I have a Lifetime ISA if I also have a Help to Buy ISA?”
Yep, you can, but you can only use the bonus from one of them to buy your first home.
It is possible to transfer your money from a Help to Buy ISA into your Lifetime ISA – check out our website’s Help Centre for more info on this.
“Can I have a Lifetime ISA if I already have another type of ISA?”
Yes! Technically, a LISA is a type of ISA and so, there’s a £20,000 limit on what you can put in across all of your ISA products within one tax year.
For example: If you put £4,000 into your LISA, you could put up to £16,000 into your ISA this tax year.
“How long can I pay into my Lifetime ISA for?”
You can open a Lifetime ISA between the ages of 18 – 39.
And you can keep putting money into your Lifetime ISA until you’re 50.
So, if you maxed out your Lifetime ISA from 18 – 50, you’d get a £33,000 bonus from the UK government. 🔥🔥🔥
“It says I can put up to £4,000 into my Lifetime ISA every tax year. When’s the tax year?”
The tax year runs from April 6th to April 5th.
“What if I have more than £4,000 to put towards my home this year?”
You can put anything above £4,000 into another account (e.g. An ISA or general account).
Then, when the next tax year comes around on April 6th, you can transfer up to £4,000 into your LISA again.
If you accidentally (or on purpose) put in more than £4,000 in a single tax year, our systems would spot it and you'd get the excess back, fee-free and penalty-free.
P.s. We’re on track to launch ISAs and general accounts this year, so you can manage all things ‘first home deposit’ in one place.
Questions about the 25% government bonus
“When do I get my 25% bonus?”
Every month you put money into your LISA. It usually takes around 4-6 weeks to wing its way over to you, but sometimes can take up to 9 weeks. The delay is the same regardless of your provider, because it's down to the government and their timelines.
"Is the 25% bonus a limited-time-deal?"
You are entitled to get the 25% bonus regardless of which point in the tax year you open your Lifetime ISA. One day, the government could totally change the bonus amount or stop the scheme (the Help to Buy scheme for example ended in 2019), but for now it's staying put.
Questions about buying with someone else
“My partner and I have Lifetime ISAs — can we use them both to buy our first home?”
Yes you can! Did someone say ✨💰 double bonus?💰✨
P.s. You should totally try our Team Up feature. It’s like a joint progress tracker for your deposit.
“What if I’m buying with my partner, and they already own a home but I don’t?”
Your partner won’t be able to use their Lifetime ISA to buy the home, but you can still use yours for your half of the house purchase.
Questions about taking money out of your Lifetime ISA
“When you’re ready to buy a home, how do you take out the money from your Lifetime ISA?”
Your solicitor/conveyancer will get in touch with us and transfer the money to your mortgage provider. You don’t have to do a thing!
“What if the house I want ends up being more than £450,000?”
This gets a little tricky, as the maximum price of a house you can buy using a Lifetime ISA has been set at £450,000 by the government (this is the same price no matter where you are in the UK, and the same price regardless of whether you're buying solo or with somebody else).
If you have a Lifetime ISA and it turns out that your first home is going to cost you more than that, you'd have 2 options:
- You can withdraw the money from your Lifetime ISA to buy your home, but the government will charge a 25% fee. This means you’ll get back less than what you put in.
- You can keep your money in your Lifetime ISA for retirement and access it from when you’re 60 years old.
“What if I’m having a bad month and need to withdraw money from my Lifetime ISA?”
You can do a ‘partial withdrawal’ as well as a full withdrawal, but unfortunately, the government will still charge a 25% fee on what you take out.
This means they get back all of the bonus, plus some of your money.
For example: Imagine you have £5,000 in your LISA (£4,000 your money, £1,000 bonus). If you wanted to get all of it out in an emergency (which isn't a house purchase) you'd face a 25% withdrawal fee. 25% of £5,000 is £1,250, so that means you'd lose all of the £1,000 bonus plus £250 of your own money.
It’s always a good idea to have an emergency fund in an account that you can easily access. Even if you start small with your Lifetime ISA, it’s good progress.
“What happens to my Lifetime ISA if I don't use it to buy my first home?”
You can also use a Lifetime ISA for retirement and the government will still give you a 25% bonus on your savings or investments.
Then, when you’re 60, you can take out your money fee-free.
"I'm already in the process of buying a house. Can I open a Lifetime ISA and use the money in it (with the 25% bonus) for my new home?"
Your Lifetime ISA has to be open for one full year before you can use it penalty-free to buy a home. It's a government thing. The 365-day timer starts when your first payment hits the account.
So if you're really close (less than 12 months) away from buying your first place, it's probably already too late to open a Lifetime ISA. If you're further than 12 months away from being ready to buy a home, then it's definitely something to consider.