Lifetime ISA vs cash ISA for a first home
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Important: This guide provides general information, not personalised financial advice. Financial products, rates and eligibility rules can change, so check the provider’s current terms before applying.
FSCS protects eligible deposits up to £120,000 per person, per authorised institution.
Quick answer
A Lifetime ISA adds a 25% bonus on up to £4,000 a year towards a first home costing £450,000 or less, if you buy at least 12 months after your first payment. A cash ISA has no bonus but no price cap, no charge and no timing rules.
If your home might cost more than £450,000, or you might buy within 12 months, the 25% withdrawal charge could leave you with less than you paid in.
Side by side
| Feature | Lifetime ISA | Cash ISA |
|---|---|---|
| Bonus | 25% (max £1,000 a year) | None |
| Price cap | £450,000 | None |
| Timing | First payment 12+ months before buying | None |
| Withdraw for other reasons | 25% charge (unless 60+ or terminally ill) | No charge from the government |
| Annual limit | £4,000 | Part of £20,000 (planned £12,000 cash limit for under-65s from April 2027) |
Rules and figures from GOV.UK, as of 4 October 2026. General information, not advice.
Who it’s for
- Lifetime ISA: first-time buyers aged 18–39 buying under £450,000 in a year or more
- Cash ISA: buyers who need flexibility on price or timing
Who should skip it
These are general points to weigh up, not advice. You may want to look elsewhere if:
- You’re 40 or over — you can’t open a Lifetime ISA
- You might buy in a high-price area above £450,000
Full explanation
Couples buying together can each use a Lifetime ISA and both get a bonus.
You can hold a Lifetime ISA and a cash ISA in the same tax year, within the overall £20,000 ISA allowance.
The catch
The bonus is paid monthly. Use a conveyancer who can deal with Lifetime ISA withdrawals, and check timings with your provider.
FAQs
Can I use a Lifetime ISA for a house over £450,000?
You can withdraw, but you’d pay the 25% charge.
How soon can I use my Lifetime ISA to buy?
At least 12 months after your first payment.
Can two people use Lifetime ISAs for one home?
Yes, if both are first-time buyers.
Does a cash ISA have a price cap?
No.
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