Help to Buy ISA or Lifetime ISA?

Money Advice Service

If you’re looking to make the most of your savings, you’re probably interested in getting a Lifetime ISA, or a Help to Buy ISA. If you manage your finances well, both can prove a great way to make your money stretch further, but which is best for you? In this guide, we break down the pros and cons and look at different scenarios.

What’s the difference between a Help to Buy ISA and a Lifetime ISA?

Help to Buy ISA

This type of ISA has been available since 1 December 2015.

Quick facts:

  • Designed for first-time buyers, aged over 16 who are looking save up a deposit for their home.
  • The government adds 25% to your savings, for a maximum bonus of £3,000.
  • You can use it to buy a home worth up to £250,000 (up to£450,000 in London).

Help to Buy ISAs are available until 30 November 2019. You won’t be able to get one after this date. If you opened your Help to Buy ISA before then, you can keep saving into your account. You must claim your bonus by 1 December 2030.

Lifetime ISA

This new type of ISA has been available since 6 April 2017.

Quick facts:

  • Designed to help people aged between 18 and 40 save up for their first home, or retirement.
  • The Government will give you a bonus worth 25% of what you pay in, up to a maximum of £4,000 per year.
  • You can use it to buy a home worth up to £450,000 anywhere in the country.
Find out more in A guide to Lifetime ISAs.

Which one should I get?

Well that really depends on your personal circumstances. We’ve put together a few scenarios to help you make up your mind.

I need to buy a property quickly

The Lifetime ISA rules mean you’ll have to wait at least a year before you can use one to buy a home.

The Help to Buy ISA, on the other hand, will pay out a maximum bonus of £400 after just three months once you’ve got £1,600 in total – you’ll need to put in the maximum amount of £1,200 in month one, and £200 in month two and three.

I already own a home

If you’re not a first-time buyer, then you can’t take out a Help to Buy ISA.

I’m over 40 and a first-time buyer

You need to be aged between 18 and 40 to qualify for a Lifetime ISA.

I’m over 40 and have already owned a home

Unfortunately, you’re not eligible for either product.

This article is provided by the Money Advice Service.

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