Pensions & Retirement
Help to Buy ISA vs Lifetime ISA — Which Should You Choose?
Compare Help to Buy ISA and Lifetime ISA for first-time buyers. Bonus amounts, limits, rules and which one is better for your deposit goals.
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4 min read
First-time buyers have two government bonus schemes to help build a deposit. Here’s how they compare and which to choose.
Quick Comparison
Key Differences
| Feature |
Help to Buy ISA |
Lifetime ISA |
| Still open |
No (closed Nov 2019) |
Yes |
| Annual limit |
£2,400 |
£4,000 |
| Government bonus |
25% |
25% |
| Max annual bonus |
£400 |
£1,000 |
| Property limit |
£250,000 (£450k London) |
£450,000 (UK-wide) |
| When bonus paid |
At completion |
Monthly |
| Age to open |
16+ |
18-39 |
| Withdrawal penalty |
None (lose bonus only) |
25% of amount |
Maximum Bonuses
| ISA Type |
Max Contribution |
Max Bonus |
Timeline |
| Help to Buy |
£12,000 total |
£3,000 |
Over 5+ years |
| Lifetime ISA |
£4,000/year |
£32,000 |
Age 18-50 |
Help to Buy ISA (Closed to New Savers)
How It Works
| Feature |
Details |
| Monthly limit |
£200 per month |
| First month bonus |
Extra £1,000 allowed |
| 25% bonus |
On amounts from £1,600-£12,000 |
| Minimum for bonus |
£1,600 |
| Maximum bonus |
£3,000 |
Key Dates (Existing Holders)
| Date |
Action Required |
| November 2029 |
Last date to save |
| November 2030 |
Last date to claim bonus |
How the Bonus Works
| Savings |
25% Bonus |
| £1,600 |
£400 |
| £4,000 |
£1,000 |
| £8,000 |
£2,000 |
| £12,000 (max) |
£3,000 |
Property Price Limits
| Location |
Maximum Price |
| Outside London |
£250,000 |
| London |
£450,000 |
Withdrawal Rules
| Scenario |
Consequence |
| Use for property |
Get 25% bonus |
| Withdraw for other use |
Keep money, no bonus |
| Don’t buy property |
No bonus, no penalty |
Lifetime ISA
How It Works
| Feature |
Details |
| Annual limit |
£4,000 |
| 25% bonus |
Added monthly |
| Withdrawal for house |
Tax-free + bonus |
| Withdrawal at 60+ |
Tax-free + bonus |
| Early withdrawal |
25% penalty |
Contributions and Bonus
| Annual Contribution |
Government Adds |
Total |
| £500 |
£125 |
£625 |
| £1,000 |
£250 |
£1,250 |
| £2,000 |
£500 |
£2,500 |
| £4,000 |
£1,000 |
£5,000 |
Over Multiple Years
| Years Saving |
Your Contributions |
Bonus |
Total |
| 1 year |
£4,000 |
£1,000 |
£5,000 |
| 3 years |
£12,000 |
£3,000 |
£15,000 |
| 5 years |
£20,000 |
£5,000 |
£25,000 |
| 10 years |
£40,000 |
£10,000 |
£50,000 |
LISA Rules for Property
| Requirement |
Details |
| First-time buyer |
Never owned property |
| Property price |
Up to £450,000 |
| UK property |
Must be in UK |
| LISA age |
Minimum 12 months old |
| Live in it |
Must be your home |
The 25% Withdrawal Penalty
| What It Means |
Calculation |
| Early withdrawal |
Lose 25% of total |
| Example: £5,000 |
Penalty: £1,250 |
| You receive |
£3,750 |
| Effect |
Lose bonus + 6.25% of your money |
Side-by-Side Scenarios
Scenario 1: Buying in 3 Years
| Factor |
Help to Buy ISA |
Lifetime ISA |
| Save for 3 years |
£7,400 (inc £1k first month) |
£12,000 |
| Bonus |
£1,850 |
£3,000 |
| Total for deposit |
£9,250 |
£15,000 |
Scenario 2: Buying £300,000 House
| Factor |
Help to Buy ISA |
Lifetime ISA |
| Property price limit |
£250,000 (£450k London) |
£450,000 |
| Can use bonus? |
No (unless London) |
Yes |
| Winner |
|
LISA |
Scenario 3: Already Have H2B ISA
| Option |
Strategy |
| Keep H2B only |
Simple, smaller bonus |
| Open LISA too |
Bigger potential bonus |
| Transfer H2B to LISA |
Maximise LISA (loses H2B) |
| Use both for same house |
Only ONE bonus allowed |
Which Is Better?
Choose Lifetime ISA If:
| Situation |
Why |
| New saver |
H2B closed anyway |
| Want bigger bonus |
£1,000 vs £400/year |
| Property £250k-£450k |
H2B limit too low |
| Can commit long-term |
Less flexible |
| Can afford £333/month |
Max out LISA |
Keep Help to Buy ISA If:
| Situation |
Why |
| Already have H2B |
Existing savings protected |
| Buying soon |
LISA needs 12 months |
| Might not buy |
No withdrawal penalty |
| Property under £250k |
H2B limit OK |
| Prefer flexibility |
Can withdraw without penalty |
Have Both Strategy
| Account |
Purpose |
| LISA |
Primary house deposit (use bonus) |
| H2B |
Additional savings (no bonus on this) |
| Or |
H2B for house, LISA for retirement |
Opening a LISA
Provider Options
| Provider Type |
Examples |
Features |
| Cash LISA |
Moneybox, Skipton, Nottingham BS |
Savings account, interest |
| Stocks & Shares LISA |
AJ Bell, Hargreaves, Nutmeg |
Invest, potential growth (risk) |
Cash vs Stocks & Shares
| Factor |
Cash LISA |
S&S LISA |
| Risk |
None |
Investment risk |
| Returns |
Interest (3-5%) |
Market dependent |
| Best for |
Buying in 1-3 years |
Longer timeframe |
| Flexibility |
Stable value |
Value fluctuates |
Combining with Other Savings
ISA Allowance
| ISA Type |
Counts Toward £20k Limit? |
| Cash ISA |
Yes |
| S&S ISA |
Yes |
| Lifetime ISA |
Yes (£4k max) |
| Help to Buy ISA |
No (separate) |
Example Split
| Account |
Amount |
| LISA |
£4,000 |
| Cash ISA |
£10,000 |
| S&S ISA |
£6,000 |
| Total ISA allowance used |
£20,000 |
Important Timelines
LISA 12-Month Rule
| Opened |
Can Buy Property After |
| January 2025 |
January 2026 |
| Now |
12 months from now |
H2B Bonus Timing
| Event |
Bonus Situation |
| Exchange contracts |
Request closing letter |
| Solicitor claims bonus |
At completion |
| Note |
Bonus NOT in deposit upon exchange |
LISA Bonus Timing
| Event |
Bonus Situation |
| Contribute monthly |
Bonus added within weeks |
| At completion |
Full balance available |
| Advantage |
Bonus in account already |
Summary
| Factor |
Winner |
| Annual savings limit |
LISA (£4,000 vs £2,400) |
| Maximum bonus |
LISA (£32k lifetime vs £3k) |
| Property price limit |
LISA (£450k vs £250k) |
| Flexibility |
H2B (no penalty) |
| New savers |
LISA (only option) |
| Buying very soon |
H2B (no 12-month rule) |
| Recommendation |
|
| New first-time buyer |
Open LISA |
| Have existing H2B |
Consider opening LISA too |
| Buying within 12 months |
Use H2B if you have it |
| Property over £250k |
Must use LISA for bonus |