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

By Wealthvieu · Updated

Both the Lifetime ISA (LISA) and the Help to Buy ISA offer government bonuses to first-time buyers — but they work very differently. The Help to Buy ISA is now closed to new applicants, but existing holders can still contribute until November 2029.

Table of Contents

Side-by-Side Comparison

Feature Lifetime ISA (LISA) Help to Buy ISA
New applications Open Closed (since 30 Nov 2019)
Annual contribution limit £4,000/year £2,400/year (£200/month)
Government bonus 25% on contributions 25% on balance at closing
Max bonus per year £1,000 £600 (£50/month on £200)
Max total bonus £33,000 (age 18–50) ~£3,000 (over the account’s lifetime)
Property price limit £450,000 £250,000 (£450,000 in London)
Bonus paid Monthly/annually into account At property completion
Can use for deposit? Yes (bonus is already in account) No (bonus paid after exchange)
Withdrawal penalty 25% on unauthorised withdrawals None (but lose bonus eligibility)
Age limit 18–39 to open; contribute to 50 16+ to open
Also usable for retirement Yes (penalty-free from age 60) No (property only)

Maximum Bonus Comparison

Saving for 1 Year

LISA Help to Buy ISA
Contributions £4,000 £2,400 (£200/month)
Government bonus £1,000 £600
Total £5,000 £3,000

Saving for 3 Years

LISA Help to Buy ISA
Contributions £12,000 £7,200
Government bonus £3,000 £1,800
Total £15,000 £9,000

Saving for 5 Years

LISA Help to Buy ISA
Contributions £20,000 £12,000
Government bonus £5,000 £3,000
Total £25,000 £15,000

The LISA wins every comparison because of the higher annual limit.

When the Help to Buy ISA Works Better

Despite the lower limits, the Help to Buy ISA has a few advantages:

Advantage Detail
No withdrawal penalty Take money out anytime (but lose bonus on withdrawn funds)
No age restriction Can open at 16 (LISA requires 18+)
Simpler No penalty for non-property withdrawal
Already have one If opened before Dec 2019, keep contributing

The LISA Withdrawal Penalty Explained

If you withdraw from a LISA for anything other than a first home or after age 60, you face a 25% penalty:

Scenario Contribution Bonus Total Penalty (25%) You Receive
Withdraw £4,000 contribution £4,000 £1,000 £5,000 -£1,250 £3,750
Withdraw £12,000 over 3 years £12,000 £3,000 £15,000 -£3,750 £11,250

⚠️ The 25% penalty applies to the total (contribution + bonus), meaning you actually lose 6.25% of your original contributions.

Property Price Limits

LISA Help to Buy ISA
England £450,000 £250,000
Wales £450,000 £250,000
Scotland £450,000 £250,000
Northern Ireland £450,000 £250,000
London £450,000 £450,000

The Help to Buy ISA’s £250,000 limit is a serious constraint — the average UK house price is around £290,000. Only the London limit matches the LISA.

Can You Have Both?

Yes — you can hold both a LISA and a Help to Buy ISA simultaneously, but you can only use the government bonus from one for a property purchase.

Strategy Eligible?
Have both accounts ✅ Yes
Contribute to both ✅ Yes
Use both bonuses for same property ❌ No
Use LISA bonus for property + close HTB ISA ✅ Yes
Use HTB bonus for property + keep LISA for retirement ✅ Yes

Best Strategy If You Have Both

  1. Maximise LISA contributions first (£4,000/year)
  2. Use LISA bonus for the property (higher limit, counts toward deposit)
  3. Keep HTB ISA money as additional savings (withdraw without penalty)

Cash LISA vs Stocks & Shares LISA

Feature Cash LISA Stocks & Shares LISA
Returns Fixed interest (3.5–4.5%) Variable (historically 7-10% long-term)
Risk None (FSCS protected to £85K) Capital can go down
Best for Buying within 1-3 years Buying in 5+ years or retirement
Bonus Same 25% Same 25%

Growth Comparison Over 5 Years (£4,000/year)

Cash LISA (4% interest) S&S LISA (7% growth)
Year 1 £5,200 £5,350
Year 2 £10,608 £11,075
Year 3 £16,232 £17,195
Year 4 £22,082 £23,739
Year 5 £28,165 £30,741
Total bonus £5,000 £5,000

A stocks & shares LISA could give you ~£2,500 more over 5 years, but with the risk that your balance could fall before you need it.

Timeline for First-Time Buyers

Stage LISA Help to Buy ISA
Open account Day 1 Already open (closed to new)
First contribution Day 1 (up to £4,000) Month 1 (initial £1,200 + £200/month)
12-month rule Must be open 12 months before using for property No waiting period
Bonus applied Already in account After exchange of contracts
Use for deposit ✅ Yes ❌ No (arrives too late)

The LISA’s 12-month rule means you should open one ASAP even if you’re not ready to save heavily.

Key Dates

Event Date
Help to Buy ISA closed to new applicants 30 November 2019
Last HTB ISA contributions accepted 30 November 2029
Last date to claim HTB ISA bonus 1 December 2030
LISA open to new applicants Ongoing (age 18-39)

Which Should You Choose?

If You… Best Option
Don’t have either yet LISA (HTB ISA is closed)
Have a HTB ISA and are under 40 Open a LISA too — use LISA bonus for property
Are buying within 12 months HTB ISA (LISA has 12-month rule)
Are buying a property over £250K (outside London) LISA (HTB ISA limit is too low)
Want flexibility to withdraw without penalty HTB ISA
Want to maximise your bonus LISA (£1,000/year vs £600)
Are saving for retirement too LISA (penalty-free from age 60)

Key Takeaways

  1. The LISA is better in almost every way — higher annual limit, higher bonus, and no regional price cap
  2. The LISA bonus counts toward your deposit — the HTB bonus arrives after exchange
  3. You can have both but can only use one bonus per property
  4. Open a LISA ASAP — the 12-month rule means earlier is always better
  5. HTB ISA is still useful if buying within 12 months or as a flexible savings vehicle
  6. The 25% LISA withdrawal penalty is harsh — only use it if you’re committed to property or retirement
  7. Consider a stocks & shares LISA if buying in 5+ years
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