🥊 It's the ISA showdown you've all been waiting for 🥊
In one corner, we have the Lifetime ISA. Aaaannd in the other corner, make some noise for the Help to Buy ISA.
So, which account will be your first home champion? Let’s put them head to head.
What’s a Lifetime ISA?
A Lifetime ISA is a type of account with a 25% bonus from the UK government. It’s designed to help people buy their first home, or prepare for retirement.
The bonus, plus any interest you earn or returns on investment you make are all tax-free!
Read our mini-guide to Lifetime ISAs here 👀
What’s a Help to Buy ISA?
A Help to Buy ISA is also an account for first-time home buyers with a 25% bonus from the UK government. Again, the bonus, interest and returns are tax-free.
Sound similar, but they’re pretty different.
So, what are the differences between a Lifetime ISA and Help to Buy ISA?
(Short for time, and want a quick run down instead? Click to check out our Instagram post👇)
(Got time? Keep reading for a deep dive into Help to Buy ISAs vs Lifetime ISAs 👇)
Can you still open a Lifetime ISA or Help to Buy ISA?
Lifetime ISA
Yes, you can still open a Lifetime ISA (and there’s no sign of them going anywhere).
Help to Buy ISA
Unfortunately, you can’t open a Help to Buy ISA anymore (they closed the doors on new accounts back in 2019). If you managed to open one before the closing date, you can still pay into your Help to Buy ISA until November 2029 and buy a home with it until November 2030.
Winner of this round: Lifetime ISA 🥊
Are there any age restrictions with a Lifetime ISA or Help to Buy ISA?
Lifetime ISA
- You have to be over 18 and under 40 to open a Lifetime ISA.
- You can pay into your Lifetime ISA and earn the government bonus up until your 50th birthday.
Help to Buy ISA
- You had to be over 16 to open a Help to Buy ISA.
- There’s no specific upper age limit for paying into your Help to Buy ISA (but remember that you won’t be able to pay into your account from November 2029).
Winner of this round: Lifetime ISA 🥊 (but only because Help to Buy ISAs are ending soon)
Which account can I put more money into — a Lifetime ISA or a Help to Buy ISA?
Lifetime ISA
- Monthly maximum: N/A
- Yearly maximum: £4,000 per tax year (April 6th – April 5th)
- Total maximum: £128,000 (from age 18 – 50)
Help to Buy ISA
- Monthly maximum: £200 a month
- Yearly maximum: £2,400 after the first tax year*
- Total maximum: £12,000 (from age 16+)
*In the first month of opening your Help to Buy ISA, you would’ve been able to put in an initial deposit of up to £1,200. So your first year might’ve looked like this: £1,200 opening deposit + £200 a month = £3,600. But after that, you’re limited to £200 a month. £200 x 12 months = £2,400.
Winner of this round: Lifetime ISA 🥊
Which account gives me the biggest government bonus — a Lifetime ISA vs or Help to Buy ISA?
With both the Lifetime ISA and Help to Buy ISA, you get a bonus worth 25% of what you put into your account. So it depends on how much you can put towards your home.
Lifetime ISA
You can get £1,000 from the UK government every tax year if you put £4,000 into your Lifetime ISA. If you did that every year from 18 to 50, you’d get a total bonus of £32,000.
Help to Buy ISA
You can get £3,000 from the government when you put the max £12,000 into your Help to Buy ISA.
Winner of this round: Lifetime ISA 🥊
How does the bonus work on a Lifetime ISA vs Help to Buy ISA?
Lifetime ISA
- You get the 25% bonus on any money you put into your LISA account. Even if you put in £1, you’d get 25p.
- The government calculates your LISA bonus every month.
- It normally takes 4 – 9 weeks for the bonus to land in your LISA account.
Help to Buy ISA
- You don’t start earning your bonus until you’ve put at least £1,600 into your Help to Buy ISA.
- You receive your bonus in one block once you’re ready to buy your home.
Winner of this round: It’s a tie! 🙌
What kind of property can I buy with a Lifetime ISA vs Help to Buy ISA?
Lifetime ISA
- You can buy any type of residential property or land anywhere in the UK.
- It has to be your first home.
- You have to buy the property with a mortgage (not pay outright).
- You have to live in the property (not rent it out).
- You can buy a home worth up to £450,000.
Help to Buy ISA
- You can buy any type of residential property or land anywhere in the UK.
- It has to be your first home.
- You have to buy the property with a mortgage (not pay outright).
- You have to live in the property (not rent it out).
- You can buy a home worth up to £450,000 in London and up to £250,000 anywhere else in the UK.
Winner of this round: Lifetime ISA 🥊
I need my money for something else. How easy is it to withdraw my money from a Lifetime ISA vs Help to Buy ISA?
Lifetime ISA
If you need to take money out of your Lifetime ISA before buying a home (or before the age of 60, for retirement) just get in touch with your LISA provider and they’ll sort you out. FYI, you might be asked to give up to 90 days notice before withdrawing.
Unfortunately, you’ll be charged an early withdrawal fee from the UK government. It’s 25% of how much you withdraw, which means you’ll pay back the government bonus (plus a bit extra too).
Help to Buy ISA
If you’re withdrawing money from your Help to Buy ISA for anything other than buying a home, it’s the same process — just get in touch with your ISA provider (again, you might be asked to give notice).
However, the early withdrawal fee for a Help to Buy ISA is 20%. This means you’ll miss out on the government bonus, but you won’t have to pay any extra.
Winner of this round: Help to Buy ISA 🥊
I’m ready! What’s the process of buying my first home with a Lifetime ISA vs Help to Buy ISA?
Lifetime ISA
Your account has to be open for 12 months before you can buy a home with your Lifetime ISA. It doesn’t matter how much money is in there.
Your conveyancer or solicitor will get in touch with your LISA provider and transfer the money. You don’t have to do a thing!
Help to Buy ISA
With a Help to Buy ISA, you can buy a home once you’ve saved £1,600 in your account. If you’re saving £200 a month, it could take 8 months. It depends on how much you can put aside.
Your conveyancer or solicitors will contact your Help to Buy ISA provider once your offer has been accepted. This means they’ll claim the bonus between the exchange and completion of buying your home. Again, it’ll all be handled for you.
Winner of this round: It’s a tie! 🙌
So, now what?
Can I have both a Lifetime ISA and a Help to Buy ISA?
Yes you can, but you can only use the bonus from one of them to buy your first home.
Can I transfer from a Lifetime ISA to a Help to Buy ISA?
You can only transfer money from your Lifetime ISA to a Help to Buy ISA that you opened pre-November 2019. As long as the provider manages your transfer (and you don’t take the money out yourself) you won’t be charged any early withdrawal fees.
P.s. Remember that you have until November 2030 to buy a home with a Help to Buy ISA.
Can I transfer from a Help to Buy ISA to a Lifetime ISA?
Yep, you can transfer to an existing Lifetime ISA, or set up a new one. Again, ask your providers to do the transfer so you don’t get caught out with any unexpected early withdrawal fees.
Want to transfer to a Nude Lifetime ISA?
With Nude, you get so much more than a government-boosted account and transferring is a total breeze.
Read 16 reasons why you should save for a home with us.
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