Help-to-buy ISA vs Lifetime ISA (LISA)

If you are saving to buy a home, then you should think about opening a Help-to-buy ISA or a Lifetime ISA.

There are slightly different rules and eligibility criteria that apply to each, so we have summarised this in the table below, to help you choose which is best for you and you can read on for more info.

How much can I save? £4,000/year £2,400/year (£3,400 in first year)
How to save: Lump sums or monthly Monthly – up to £200/month
Max property price? £450,000 £250,000 (£450,000 in London)
How quickly can you use it? After 12 months Once you have saved £1,600 (you can do this in 3 months)
When’s the bonus paid? Monthly On completion when you buy a home
Who is eligible? Anyone aged 18 to 39 Any first-time buyer aged 16+
Cash or shares ISA? Either Cash only

If you’re saving to buy a house, especially if you’re a first-time buyer, then investing in an ISA can be a useful way to increase your savings. 
Both schemes give you a 25% government bonus on money that you save (up to certain limits) so you can afford to buy a house quicker.

But which type? Lifetise can help you decide.

You have a choice of a Lifetime ISA (LISA) or a Help to Buy ISA. Both can help you save up for buying a house, but one or the other is likely to be better for your particular circumstances. So if you’re not sure which one suits you best, these questions should help…

Not a first time buyer? You’ll need a LISA

As part of the government’s Help to Buy schemes, a Help to Buy ISA is only available for first time buyers. So if you have ever owned another property (even just a share in a property) then you can’t get a Help to Buy ISA. You can still get a LISA as a non first-time buyer, but you must be under the age of 40 to open a LISA.

Buying in less than 12 months? Get a Help to Buy ISA

If you’re planning to buy a house in under 12 months, then the Help to Buy ISA will be better for you. That’s because you can’t get the bonus on the Lifetime ISA until you’ve had it open for at least a year. With the Help to Buy ISA, you can use it and collect a bonus as long as you’ve saved £1,600 (which you could manage in 3 months).

Over 40? Sorry – you can’t get a LISA

For some reason, the government has limited the LISA to people under the age of 40. So if you are 40 or over, then only the Help to Buy ISA is available for you.

Spending more than £250,000 outside London? You’ll need a LISA

You can only use the Help to Buy ISA if you are spending under £250,000 (or £450,000 in London). So for many people that rules it out, as their house price even as a first time buyer is higher than this. The limit is £450,000 under the LISA, no matter where in the country you are buying.

How to buy a home
which ISA is best for me help to buy or lifetime ISA
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