The Lifetime ISA: a 25% bonus for your first home
The Lifetime ISA (LISA) is one of the best deals available to a UK first-time buyer: the government adds a 25% bonus to what you pay in. Here's how that bonus stacks up over a few years.
Free money toward your first home
The Lifetime ISA (LISA) is designed for buying a first home (or for retirement). Its headline feature is a 25% government bonus on everything you pay in, up to an annual limit — so for every £4 you save, the government adds £1.
How the bonus stacks up
If you pay in the annual maximum for four years, here's how your own money and the government bonus build together:
- Your contributions
- Government bonus (25%)
That's £16,000 of your own money turned into £20,000 toward a deposit — a £4,000 boost, before any investment growth.
What it means for your mortgage
That £20,000 — including the £4,000 bonus — goes onto your deposit. Here's how using the full LISA compares with putting in only your own £16,000 on a £300,000 home:
| Your £16k only | With the bonus | |
|---|---|---|
| Down payment | £16,000 | £20,000 |
| Mortgage (amount borrowed) | £284,000 | £280,000 |
| Monthly payment | £1,660 | £1,637 |
| Total interest over 25 yrs | £214,071 | £211,056 |
- Total interest paid
Using the account, your monthly payment is about £23 lower and you pay roughly £3,015 less interest over the life of the loan.
The rules to know
- You must open it before a certain age and can pay in up to another age cap.
- The home must be your first and under a maximum property price.
- Withdraw for anything else (before retirement age) and you pay a penalty that can claw back more than the bonus — so only use it as intended.
- The older Help to Buy ISA is closed to new savers; the LISA is its successor.
Where it fits
Use the LISA to capture the full bonus, then hold any extra savings in a Cash or Stocks & Shares ISA. When you're ready, see what your deposit buys on the UK mortgage calculator.
This page is general educational information to help you think it through — not financial, tax, or legal advice. Your own situation is unique; consider speaking with a qualified adviser before making a big decision. See how we calculate and our Privacy Policy.