If you’re a UK resident aged 18-39, a LISA can generate thousands of pounds of extra money you can use to finance a first home. You can pay in a maximum of £4K every tax year, with the government adding 25% up to a maximum of £1K annually, until you reach 50. So if you took out a LISA on your 18th birthday and paid in the maximum amount every year that would come to an additional £32K, absolutely free.
As with all these things, LISAs come with a number of caveats.
The first is that you can only use the money to finance a first home and not, say, start a business or go travelling (strictly speaking you can use the money for something other than property but you have to pay a hefty penalty). You can’t use a LISA to finance a buy-to-let property either; LISAs are purely about putting a roof over your head. It’s possible to use a LISA to invest for your retirement but that’s another story, and there’s a good chance you’d be better off paying into a conventional pension anyway.
If for some reason you never find the perfect property you can access your LISA funds on your 60th birthday. It’s possible to withdraw your money earlier but be warned, you’ll be hit with a 25% penalty on any amount taken out. Meaning you could end up withdrawing less than you have contributed.
Assuming you stick with it, you can use your LISA to help buy a property anywhere in the UK up to a maximum price of £450K. The earliest you can use your LISA fund is one year after opening it, although we encourage investing for the long-term to help maximise the potential for compound growth.
Importantly, you can combine your LISA with that of a partner to buy a first home, essentially doubling the amount of extra money at your disposal. Finally, it’s fine to have a Help to Buy ISA at the same time as a LISA - you just can’t use both to buy the same property.