LISA vs Help to Buy ISA: Which Gets You to Your Deposit Faster?
Help to Buy ISA closed to new applicants in November 2019. If you already have one, you have until November 2029 to use the bonus. New first-time buyers should use a Lifetime ISA — here's how the numbers compare.
Quick Reference
| Feature | Help to Buy ISA | Lifetime ISA (LISA) |
|---|---|---|
| Available to new savers? | No (closed Nov 2019) | Yes (ages 18–39) |
| Annual contribution limit | £2,400/yr (£1,200 in year 1) | £4,000/yr |
| Government bonus | 25% on savings | 25% on contributions |
| Maximum annual bonus | ~£600 | £1,000 |
| Total maximum bonus | ~£3,000 | £33,000 (over lifetime) |
| Property price cap | £250,000 (£450,000 London) | £450,000 (UK-wide) |
| Minimum property value | None | None |
| When is bonus paid? | At completion | Monthly |
| Penalty for other withdrawals | None (but no bonus) | 25% penalty on withdrawal |
| Also usable for retirement? | No | Yes (from age 60) |
Help to Buy ISA — What You Need to Know If You Have One
If you opened a Help to Buy ISA before 30 November 2019, you can continue using it:
- Save until: 30 November 2029
- Claim bonus by: 1 December 2030
- Monthly saving limit: £200 (£1,200 in the first calendar month)
- Minimum bonus claim: £400 (requires saving at least £1,600)
- Maximum bonus: £3,000 (requires saving £12,000)
The 25% bonus is not in the ISA itself — it is paid by HMRC to your solicitor at completion, directly toward your property purchase. You cannot use it as part of the exchange deposit.
HTB ISA: Bonus Build-up Over Time
| Savings | HTB ISA Bonus | Total toward deposit |
|---|---|---|
| £1,600 | £400 | £2,000 |
| £4,000 | £1,000 | £5,000 |
| £8,000 | £2,000 | £10,000 |
| £12,000 | £3,000 | £15,000 |
At £200/month, reaching £12,000 takes 5 years from a fresh start (or fewer if started before closure).
Lifetime ISA (LISA) — The Current Option
For new first-time buyers, the LISA is the government-backed scheme in 2026. Key rules:
- Must open between age 18 and 39
- Contribute up to £4,000/year (counts within your £20,000 annual ISA allowance)
- Government pays 25% bonus monthly — up to £1,000/year
- Use toward first property purchase (up to £450,000) or from age 60 for retirement
- Accounts available as Cash LISA or Stocks and Shares LISA
LISA: Bonus Build-up Over Time (max contributions)
| Years of saving | Total contributed | Government bonus | Total in LISA |
|---|---|---|---|
| 1 | £4,000 | £1,000 | £5,000 |
| 2 | £8,000 | £2,000 | £10,000 |
| 3 | £12,000 | £3,000 | £15,000 |
| 5 | £20,000 | £5,000 | £25,000 |
| 10 | £40,000 | £10,000 | £50,000 (+ any growth) |
Compared to a Help to Buy ISA, the LISA generates significantly more bonus because the annual contribution limit is more than double and the maximum bonus per year is £1,000 vs ~£600.
Head-to-Head: Saving for a £250,000 Property Over 5 Years
| Scenario | Annual saving | 5-yr total saved | Bonus | Property fund |
|---|---|---|---|---|
| Help to Buy ISA (max £2,400/yr) | £2,400 | £12,000 | £3,000 | £15,000 |
| LISA (max £4,000/yr) | £4,000 | £20,000 | £5,000 | £25,000 |
| LISA + Stocks ISA (remaining allowance) | £4,000 + investing | £20,000 + growth | £5,000 | £25,000+ |
The LISA generates £2,000 more in government bonus over 5 years even when the comparison is held on equal terms. If using a Stocks and Shares LISA, growth on top of contributions adds further.
The LISA Withdrawal Penalty — Understanding the Real Cost
The 25% penalty on non-qualifying withdrawals (i.e., not for a first home or from age 60) is often misunderstood. It's not a 25% cut of your contributions — it applies to the total withdrawal amount including bonus:
| Amount in LISA | If you withdraw (non-qualifying) | Penalty (25%) | You receive |
|---|---|---|---|
| £10,000 (your money: £8,000, bonus: £2,000) | Full withdrawal | −£2,500 | £7,500 |
| £5,000 (your money: £4,000, bonus: £1,000) | Full withdrawal | −£1,250 | £3,750 |
You effectively lose the government bonus plus approximately 6.25% of your own savings. For this reason, a LISA is best suited to savers who are confident they will either buy a qualifying property or keep the money until age 60.
Can You Hold Both?
Yes — if you opened a Help to Buy ISA before November 2019, you can hold both a HTB ISA and a LISA simultaneously. However, you can only use one bonus toward a single property purchase. Most people in this position choose to use the LISA bonus at purchase and keep the HTB ISA either closed or repurpose it as a regular savings account.
Strategy for dual holders
- Max out LISA contributions each year — better bonus rate
- Keep HTB ISA savings if already built up — accessible without penalty if needed for other purposes
- Use LISA bonus at completion — solicitor claims on your behalf
- Do not use HTB ISA bonus on the same purchase — HMRC will reject it
Which Should You Open?
If you're a first-time buyer under 40 in 2026: open a Lifetime ISA. The Help to Buy ISA is closed to new applicants, the LISA bonus is higher, the property cap is more generous (£450,000 vs £250,000 outside London), and the LISA doubles as a pension pot from age 60.
Caveats:
- £450,000 property cap: If you plan to buy in London, check whether your target property price might exceed this
- Access penalty: Only open a LISA if you're confident you'll buy within the rules or keep it to 60
- Account opening: Several providers offer LISAs including Moneybox, Nutmeg, and AJ Bell; compare interest rates or investment options
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