Using a Lifetime ISA for your first home
What type of property can I buy with a Lifetime ISA?
If you use the Lifetime ISA to save for buying your first home, it must be:
- £450,000 or less
- your first property, or interest/share in a property in the UK
- for you to live in, i.e. it can’t be a buy-to-let property.
When can I access my savings to buy my home?
It must be at least 12 months since the first contribution was made to your Lifetime ISA before you can withdraw funds from it to buy your first home.
I want to buy my first home within the next three to five years. Should I open a cash, or stocks and shares, Lifetime ISA?
The type of Lifetime ISA you choose will depend on your attitude to risk and reward.
However, as investments are for the longer term, if you plan to buy your first home within three years you should probably open a cash Lifetime ISA.
If you’re planning to buy your first home in more than three years time, you may want to consider a stocks and shares Lifetime ISA. Investing in stocks and shares offers the possibility of better returns in the long run and could help you reach your goal faster. However, remember that your capital is at risk and the value of your investment can go down as well as up.
Can I use the funds in my Lifetime ISA as a deposit for a shared ownership property?
Yes you can, but the overall value of the house can’t exceed the £450,000 limit.
I already own property in another country — can I use the Lifetime ISA to buy my first property in the UK?
No. If you already own, or part-own, property anywhere else in the world you can’t use the Lifetime ISA to save for a deposit to buy property in the UK.
How do I get a mortgage?
Once you have enough money put away and you’re ready to buy your home, you'll probably need a mortgage. It can be tricky to know which mortgage to go for, or even where to start. We’ve teamed up with Habito to help with this.
Habito is a free online mortgage broker, which means they’ll give you mortgage advice and find you the right mortgage out of 20,000 options.
Find your ideal mortgage for free
As part of our affiliate agreements, Nutmeg receives a commission payment for every successful product purchase arising from this link. Nutmeg is not involved in the actual purchase of the product and the information above does not constitute financial, legal or tax advice. Other mortgage services are available.
A Lifetime ISA may not be right for everyone
As with all investing, your capital is at risk. The tax treatment depends on individual circumstances and may be subject to change in the future. If you are unsure if a Lifetime ISA is the right choice for you, please seek financial advice.
- You must be 18-39 years old to open one.
- If you need to withdraw the money before you’re 60, and it’s not for the purchase of a first home up to £450,000, or a terminal illness, You’ll have to pay a 25% government withdrawal charge (the withdrawal penalty will be temporarily reduced from 25% to 20% from 6 March 2020 till 5 April 2021 due to coronavirus) meaning you’ll get back less than you’ve put in.
- Compared to a pension, the Lifetime ISA is treated differently for tax purposes. You may be better off contributing to a pension.
- If you choose to opt out of your workplace pension to pay into a Lifetime ISA, you may lose the benefits of the employer-matched contributions.