Help to Buy ISA vs Lifetime ISA: Which Is Right for You?
Both the Help to Buy ISA and Lifetime ISA offer a 25% government bonus to help you buy your first home. But they have very different rules, and choosing the wrong one could mean missing out on thousands of pounds.
Quick answer
The Help to Buy ISA is closed to new accounts (since November 2019). If you don't already have one, you need a Lifetime ISA: it has a higher allowance, bigger potential bonus, and a higher property price limit. The only reason to use a Help to Buy ISA is if you already have one open.
Help to Buy ISA: what you need to know
The Help to Buy ISA launched in December 2015 and was aimed at first-time buyers saving for a deposit. The government added a 25% bonus when you used the savings to buy a home. It closed to new applicants on 30 November 2019.
If you already hold a Help to Buy ISA, you can continue saving into it until 30 November 2029, and you must claim the bonus by 1 December 2030. After that, the scheme ends entirely.
Lifetime ISA: what you need to know
The Lifetime ISA (LISA) launched in April 2017. It's open to anyone aged 18–39 and can be used for either a first home purchase or retirement from age 60. You can continue contributing until age 50.
The 25% government bonus is paid monthly by HMRC, so you don't have to wait until completion to see the money. The catch is a 25% withdrawal penalty if you take money out for any other reason (which effectively means you lose 6.25% of your own savings, not just the bonus).
Side-by-side comparison
| Feature | Help to Buy ISA | Lifetime ISA |
|---|---|---|
| Available now? | Existing holders only | Yes (age 18–39) |
| Max annual contribution | £2,400 | £4,000 |
| Max annual bonus | £600 | £1,000 |
| Max total bonus | £3,000 | £33,000+ |
| Property limit | £250k (£450k London) | £450,000 |
| Retirement use | No | Yes (from age 60) |
| Withdrawal penalty | None (bonus forfeited) | 25% on total |
Which should you choose?
I already have a Help to Buy ISA
Keep saving into it until November 2029. If you're also under 40 and haven't opened a Lifetime ISA, consider doing so. You can hold both, though you can only use the government bonus from one toward a first home purchase. The LISA's higher limit often makes it worth running alongside a HTB ISA.
I'm 18–39 and don't have a Help to Buy ISA
Open a Lifetime ISA. The Help to Buy ISA isn't available to new savers. The LISA gives you a higher allowance (£4,000 vs £2,400/year), a higher property limit (£450,000 everywhere, not just London), and the option to use it for retirement if your plans change.
My property might cost more than £250,000 (outside London)
If you have a Help to Buy ISA and you're buying outside London for more than £250,000, the HTB ISA bonus will be forfeited. A LISA allows properties up to £450,000 anywhere in the UK, making it more useful for anyone buying at a higher price point.
Watch out: the LISA withdrawal penalty
The 25% penalty on non-qualifying withdrawals is steep. If you withdraw £10,000 (including a £2,000 bonus), you pay £2,500 back, meaning you get £7,500 of your own £8,000 deposit. Only put money in a LISA that you're genuinely committed to using for a first home or retirement.