Head of Content
Mortgage Advisor & Director
What is a Lifetime ISA?
A Lifetime ISA is an Individual Savings Account to help you save towards your first home or for later life. To open a Lifetime ISA you must be between 18 to 40 years old.
How much can I save with a Lifetime ISA?
With a Lifetime ISA, you can save up to £4,000 per year until you reach 50 years old.
The government tops up your savings with a 25% annual bonus, up to a maximum of £1,000 each year. The £4,000 Lifetime ISA limit counts towards you annual ISA limit of £20,000 annually.
Can I hold stocks and shares in my Lifetime ISA?
Yes, you can hold cash, stocks and shares in your Lifetime ISA, or a combination of both.
What happens to your Lifetime ISA when you turn 50?
When you turn 50 years old, you will no longer be able to pay into your Lifetime ISA and will stop receiving the 25% bonus. However, your account will remain open, and you will continue to earn savings and investment returns.
When can I withdraw money from my Lifetime ISA?
There are limited situations where you are permitted to withdraw money from your Lifetime ISA without penalty, these are:
- If you are buying your first home
- When you turn 60 years old
- If you become terminally ill
To withdraw money for any other reason, classed as an unauthorised withdrawal, you will incur a charge which is currently set at 20% and increases to 25% from 6th April 2021.
Who is eligible for a Lifetime ISA?
To open a Lifetime ISA account, you must be a UK resident or a crown servant.
Using a Lifetime ISA to buy your first home
You can use the savings from your Lifetime ISA to buy your first home if:
- The property is worth less than £450,000
- You have had your Lifetime ISA account open for at least 12 months
- You use a conveyancer or solicitor to formalise the purchase - the government transfers the funds directly to them
- You are buying the property with a mortgage
Suppose you're buying with someone else who has a Lifetime ISA. In that case, they can also use their savings towards purchasing the home, with the caveat that if they already have a legal interest in a property, they will incur the withdrawal charge.
Get your mortgage in principle certificate in 5 minutes
Can I transfer money from my Help to Buy ISA?
Yes, you can transfer funds from your Help to Buy ISA to your Lifetime ISA.
If you are transferring the other way, you will incur the withdrawal charge.
What about saving for later life?
You can withdraw your funds from your Lifetime ISA from the age of 60 without penalty. When you die, your Lifetime ISA ends on the date of your death, and there is no penalty for withdrawing the funds from your account.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.