Should I use a Help to Buy ISA or a Lifetime ISA for my house deposit?

Full answer

For anyone newly saving toward a first home deposit today, this is really a moot comparison in one direction -- Help to Buy ISAs are no longer open to new savers -- but understanding the differences remains useful for existing Help to Buy ISA holders deciding whether to also open a LISA, and for context on why the LISA replaced it. **Help to Buy ISA -- closed to new savers** Help to Buy ISAs stopped accepting new accounts from November 2019, though existing account holders can continue contributing until November 2029 and must claim their government bonus by November 2030. The scheme allowed an initial deposit of up to £1,200 plus £200 a month thereafter, with a 25% government bonus on the total saved (up to a maximum bonus of £3,000, meaning a maximum total saved of £12,000 attracted the full bonus), usable toward homes up to £250,000 (£450,000 in London). **Lifetime ISA (LISA) -- the current option** The LISA allows saving up to £4,000 a year (a meaningfully higher annual limit than Help to Buy ISA's roughly £2,400-a-year pace after the initial deposit), also with a 25% government bonus, paid monthly rather than only at the point of house purchase. The LISA property price cap is £450,000 UK-wide (not just London), higher than Help to Buy ISA's standard £250,000 cap outside London. **Why the LISA is generally better today** Because the LISA allows a higher annual contribution (£4,000 vs Help to Buy ISA's slower monthly pace), applies the same 25% bonus rate, and has a higher, UK-wide property price cap (£450,000 vs £250,000 outside London), a saver starting from scratch today can build a larger bonus-boosted deposit faster with a LISA than the old Help to Buy ISA ever allowed. **Can you have both?** Existing Help to Buy ISA holders CAN also open and contribute to a LISA, but crucially the 25% government bonus can only be used ONCE, on ONE home purchase -- you cannot claim and use both a Help to Buy ISA bonus and a LISA bonus toward the same house purchase. Most people in this position choose to use whichever pot has grown largest, or transfer their Help to Buy ISA balance into their LISA (subject to the LISA's own annual contribution limit constraining how much can move across in a single tax year) to consolidate into the higher-cap scheme. **Worked example** A saver with an existing Help to Buy ISA containing £8,000 (attracting a £2,000 bonus at 25%) also opens a LISA and contributes the maximum £4,000 a year going forward, generating a £1,000 bonus each year on top. When they come to buy a £350,000 first home, they can only apply ONE bonus (either the Help to Buy ISA's or the LISA's, not both) to that specific purchase -- so they would typically choose to use whichever scheme's bonus and balance work best for their specific completion timing and solicitor's process, since the mechanics of claiming each bonus differ slightly (Help to Buy ISA bonus is claimed by your solicitor near completion; LISA bonus is usually already included in the LISA balance monthly). **Bottom line for new savers** If you are starting to save for a first home today and have never had a Help to Buy ISA, the Lifetime ISA is your relevant option -- the comparison mainly matters for people who already hold a Help to Buy ISA from before the 2019 closure, deciding how to combine or prioritise the two schemes.

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