ISAs UK: Cash, Stocks & Shares, Lifetime, Junior and Transfer Rules

Help to Buy ISA vs LISA UK: Which Is Better for First-Time Buyers?

Complete comparison of Help to Buy ISA vs Lifetime ISA for UK first-time buyers. Bonuses, limits, withdrawal rules, and which account is best for your deposit.

· · 6 min read

Savings and investment information is for educational purposes only. The value of investments can go down as well as up. Cash savings up to £85,000 per person per institution are protected by the FSCS.

Both Help to Buy ISA and Lifetime ISA help first-time buyers save for a deposit with government bonuses. Here’s how they compare and which is better for you.

Read more: See our Isas guide for a complete overview of this topic.

Quick Comparison

FeatureHelp to Buy ISALifetime ISA
StatusClosed to new applicantsOpen
Annual contribution limit£2,400 (after first year)£4,000
Government bonus25%25%
Maximum bonus per year£600£1,000
Maximum total bonus£3,000No limit (to age 50)
Property price limit£250k (£450k London)£450,000 UK-wide
When bonus addedAt completionMonthly
Minimum age1618
Maximum age to openClosed39

Help to Buy ISA: Key Details

Account Overview

FeatureDetails
StatusClosed to new applicants (Nov 2019)
TypeCash ISA only
InterestVariable (typically low)
Contribution limit£200/month (£1,200 first month)

Bonus Structure

SavingsBonus (25%)Total
£4,000£1,000£5,000
£8,000£2,000£10,000
£12,000 (max)£3,000 (max)£15,000

Key Deadlines

DateWhat Happens
November 2019Closed to new applicants
November 2029Last date to save into account
November 2030Last date to claim bonus

Limitations

LimitationDetails
Property price£250,000 (or £450,000 in London)
Bonus timingAdded at completion (not available for exchange)
Exchange depositCannot use bonus for it

Lifetime ISA: Key Details

Account Overview

FeatureDetails
StatusOpen to new applicants
TypeCash or Stocks & Shares
Investment optionsSavings account or investments
Contribution limit£4,000/year

Bonus Structure

SavingsBonus (25%)Total
£4,000£1,000£5,000
£8,000 (2 years)£2,000£10,000
£20,000 (5 years)£5,000£25,000
£40,000 (10 years)£10,000£50,000

Withdrawal Rules

PurposePenalty
First property purchaseNo penalty
After age 60No penalty
Terminal illnessNo penalty
Any other reason25% penalty (lose bonus + some savings)

Warning: 25% penalty on other withdrawals means you lose more than just the bonus.

LISA Penalty Example

WithdrawnPenalty (25%)You Receive
£5,000 (£4,000 + £1,000 bonus)£1,250£3,750

You saved £4,000, get back only £3,750. The penalty exceeds the bonus.

Head-to-Head Comparison

Annual Contribution Power

YearHelp to Buy ISALISA
Year 1£3,400 max£4,000 max
Year 2£2,400£4,000
Year 3£2,400£4,000
Year 4£2,400£4,000
Year 5£2,400£4,000
5-Year Total£13,000£20,000
With bonus£16,250£25,000

Winner: LISA allows faster saving with higher limits.

Property Price Limits

LocationHelp to Buy ISALISA
Outside London£250,000£450,000
London£450,000£450,000

Winner: LISA has higher, more uniform limits.

When Bonus Is Available

StageHelp to Buy ISALISA
Exchange of contractsNot availableAvailable
CompletionAvailableAvailable
Use for depositComplicatedYes

Winner: LISA bonus available earlier in purchase process.

Flexibility

ScenarioHelp to Buy ISALISA
Withdraw for non-propertyLose bonus eligibility25% penalty
Change mind about buyingCan withdraw, lose bonusPenalty until 60
Keep for retirementNot designed for thisCan use after 60

Scenario Comparisons

Scenario 1: Saving for 3 Years

FactorHelp to Buy ISALifetime ISA
Monthly max£200 (£1,200 first month)£333.33
Saved after 3 years£7,400£12,000
Government bonus (25%)£1,850£3,000
Total available£9,250£15,000

Scenario 2: Buying a £300,000 Home

FactorHelp to Buy ISALifetime ISA
Property price limit£250,000 (£450,000 London)£450,000
Can use bonus on this property?No (outside London)Yes
ResultBonus forfeitedFull bonus used

Scenario 3: Already Have a H2B ISA

OptionEffect
Keep H2B, don’t open LISASimple — smaller bonus cap
Keep H2B, also open LISASave into both — but only ONE bonus per purchase
Transfer H2B funds to LISAMaximises LISA contribution; H2B account closes
Use H2B for house, LISA separatelyH2B for deposit bonus; LISA rolls on toward retirement

ISA Allowance

ISA TypeCounts Toward £20,000 Annual Limit?
Cash ISAYes
Stocks & Shares ISAYes
Lifetime ISAYes (maximum £4,000)
Help to Buy ISANo — outside the annual ISA allowance

This means you can hold a Help to Buy ISA alongside a full £20,000 in other ISAs without breaching the annual limit.

If You Have Both Accounts

The Rules

SituationWhat Happens
Have both accountsAllowed
Use both bonuses for one propertyNot allowed
Choose which bonusMust pick one

Strategy Options

StrategyDetails
Use LISA for propertyHigher bonus potential, use at exchange
Withdraw HTB as cashForfeit HTB bonus, keep cash
Use HTB for propertyIf LISA penalty or limits apply

Which to Use for Property

Choose LISA IfChoose HTB ISA If
Higher total savingsAlready maxed out HTB
Need bonus at exchangeProperty under £250k and HTB better
Property over £250k (outside London)Near HTB deadline

Timeline Comparison

Saving £20,000 Deposit

TimelineHelp to Buy ISALISA
With HTB~7 years to £20k + £3k bonus5 years to £20k + £5k bonus
Total buying power£23,000 + interest£25,000 + any growth

Cash vs Stocks & Shares LISA

For House Deposits

FactorCash LISAS&S LISA
Timeframe <3 yearsRecommendedRisky
Timeframe 3-5 yearsUsually saferConsider
Timeframe 5+ yearsOptionGood option
Capital guaranteeYesNo

General rule: Cash LISA for buying within 5 years. S&S LISA if 5+ years away.

Pros and Cons Summary

Help to Buy ISA

ProsCons
Simple cash savingsClosed to new applicants
Established schemeLower contribution limits
Bonus only at completion
Lower property price limits
Ends completely 2030

Lifetime ISA

ProsCons
Higher contribution limit25% penalty for other withdrawals
Higher property price limitMust be 18-39 to open
Bonus added monthly
Investment option available
Can use for retirement
Available to new applicants

Decision Framework

New First-Time Buyers

SituationRecommendation
Starting to save nowOpen LISA (HTB closed)
Buying within 5 yearsCash LISA
Buying in 5-10+ yearsConsider S&S LISA

Existing HTB ISA Holders

SituationRecommendation
Saving steadilyConsider opening LISA too
Near HTB max (£12k)Add LISA for more bonus
Buying soonUse whichever has more
Buying 3+ years awayMaximise LISA contributions

Have Both Accounts

SituationStrategy
Similar balancesUse LISA (better limits/timing)
HTB much largerMay use HTB bonus
Buying >£250k outside LondonMust use LISA
Want flexibilityKeep LISA for retirement option

Important Considerations

First-Time Buyer Definition

RequirementDetails
Never owned propertyIn UK or worldwide
Buying to live inNot buy-to-let
Both partners qualifyIf buying jointly

Mortgage Compatibility

FactorDetails
Lenders accepting LISAMost do now
Bonus timingMust coordinate with conveyancer
DocumentationNeed LISA statement

Buying Process

StepLISAHTB ISA
1Request withdrawalRequest closing statement
2Provider sends to conveyancerConveyancer claims bonus
3Bonus available at exchangeBonus arrives at completion
4Complete purchaseComplete purchase

Summary

FactorHelp to Buy ISALifetime ISAWinner
Available nowNoYesLISA
Annual limit£2,400£4,000LISA
Max bonus£3,000UnlimitedLISA
Property limit£250k/£450k£450kLISA
Bonus timingCompletionExchangeLISA
FlexibilityForfeit bonus25% penaltyDraw

Key points:

  • LISA is better for most first-time buyers
  • Help to Buy ISA closed to new applicants in 2019
  • Can hold both but only use one bonus for property
  • Cash LISA for buying within 5 years
  • Don’t withdraw LISA for non-property unless desperate (25% penalty)
  • Help to Buy ISA must be used by November 2030

For more guidance:

Sources

  1. Gov.uk — Help to Buy ISA
  2. Gov.uk — Lifetime ISA
  3. MoneyHelper — ISAs