Lifetime ISAs are designed to help people who could really benefit from that 25% government bonus — first-time home buyers who want to boost their deposit, and people retiring over the age of 60 who want to boost their pension.
If you want to use a lifetime ISA to buy your first home, here are some things you should know before opening one:
- You need to be a UK resident (this is for tax purposes).
- You can open a LISA between ages 18 – 39.
- This has to be your first home (i.e. you don’t already own a home or have any interest in another property).
- The property you’re planning to buy has to be in the UK and worth no more than £450,000.
- You need to be using a mortgage to buy the property (i.e. you can’t pay for it in full upfront).
- You have to live in the property once you buy it (i.e. you can’t use a LISA to buy a property you want to rent out).
- Your lifetime ISA needs to have been open for at least 12 months before you can withdraw your money to buy your first home.
Just so you know, if you withdraw your money for any other reason than buying your first home (or for retirement once you’re 60), you’ll have to pay an early withdrawal charge of 25% to the government. This means you would get back less than you paid in (you’d lose the government bonus and pay the government an extra £6.25 for every £100 you deposited).