Buying Your First Home with a Lifetime ISA: What You Need to Know

If you are a first-time buyer, you may have come across the Lifetime ISA (LISA) as a way to boost your deposit savings. But how does it work in practice and what should you be aware of from a conveyancing perspective?

Here’s a brief overview of the positives and potential pitfalls when using a LISA to buy your first home.

What are the positives of using a LISA?

1. Government bonus boost For every £4,000 you save each tax year, the government adds a 25% bonus – up to £1,000 per year. That’s a real boost for your deposit.

2. Tax-free growth Any interest or investment growth within the LISA is tax-free, meaning your savings work harder.

3. Perfect for first-time buyers You can use your LISA savings (including the bonus) towards the purchase of your first home, provided:

· The property costs £450,000 or less.

· You’ve held the LISA for at least 12 months.

· You’re buying with a standard mortgage.

4. Funds paid directly to your conveyancer The bonus is claimed by your solicitor or conveyancer and applied directly toward your purchase – helping reduce the cash you need on completion.

What are the drawbacks and considerations of a LISA?

1. Timing is crucial The LISA must be open for at least 12 months before you can use the bonus for a home purchase. If you plan to buy sooner, you may face penalties for withdrawing early.

2. £450,000 property price limit This is a hard limit. If the property costs more, even by £1, you can’t use your LISA without incurring a 25% penalty (which means you’ll lose more than just the bonus).

3. Can cause delays if not managed early We recommend letting your conveyancer know as soon as possible if you’re using a LISA. Bonus claims take time to process, and delays can impact your exchange and completion timelines.

4. Not ideal for joint purchases above the threshold If you are buying with someone else and the property is over £450,000, only the person using the LISA may be penalised, even if they meet all other criteria.

What can you do as a first-time buyer?

· Start early – Let your conveyancer know you’re using a LISA at the very start of your transaction.

· Check the property price – Make sure it falls within the eligibility range.

· Be realistic about timeframes – LISA withdrawals and bonus claims can take up to 30 days, so build that into your plan.

Why choose Anthony Gold?

If you are a first-time buyer using a Lifetime ISA, Anthony Gold is here to help guide you through the process and make sure everything runs smoothly. Don’t hesitate to get in touch with our conveyancing team early on in your homebuying journey.

Our expert team can assist you if you have any questions, contact us on 020 7940 4060 or send us an email at mail@anthonygold.co.uk.