Should I be applying for a lifetime ISA as a first-time buyer?

First-time buyers looking to get a lifetime ISA

Saving for your first home is a challenging and often drawn-out process. Most first-time buyers take months, even years, to save up the thousands of pounds they need to secure a deposit. But did you know that with a Lifetime ISA, you could reach your saving goal quicker?

If you’re waiting to buy your first house, then a Lifetime ISA (also known as LISA) can be an appealing option when it comes to saving for your deposit. The Lifetime ISA bonus allows you to save an additional 25% each tax year, up to £1,000.

There are certain conditions that apply, which we’ll get into shortly, but on the whole, Lifetime ISAs could be the helping hand you need to achieve one of life’s biggest goals.

At Bliss Financial, we aim to make the home-buying process a stress-free and enjoyable journey while ensuring you’re in the best position before signing any documents. We give you all the information you need to make sensible mortgage decisions and keep you updated throughout the process, making getting a mortgage easy.

Today, our experts dive into the topic of saving for a house deposit – specifically, looking at a more cash-efficient way to do it. We explore what a LISA is and whether you should consider one as a first-time buyer.

Keep reading to find out how you could save an additional 25% towards your house deposit. If you’re ready to make the move and purchase your first house, then get in touch with Bliss today for personal mortgage advice.

What is a Lifetime ISA?

A Lifetime ISA (Individual Savings Account) is a new-ish savings account that uses a government-led initiative to help first-time buyers get onto the property ladder. The LISA came out in 2017 and is a great replacement for the previous Help to Buy ISA, which was closed to new users in 2019.

You can opt for a couple of different types of LISAs, including:

  • Cash Lifetime ISA: similar to a regular savings account. It gives you more stability, knowing that you’ll receive the funds you put in.
  • Investment Lifetime ISA: offers the potential to receive higher rewards by investing in stocks and shares, but you do run the risk of losing money. If you plan to use the savings soon, a stocks and shares Lifetime ISA may not be suitable.

Investment and Cash Lifetime ISAs can also be used for retirement savings, although a workplace pension may still be the preferred option due to employer contributions and tax relief. However, as we’re experts in mortgages for first-time buyers, we won’t be discussing LISAs for retirement.

Today, we’re focusing on whether you should apply for a Lifetime ISA to buy your first home.

Who can open a Lifetime ISA?

You can open a Lifetime ISA as long as you are a UK resident over 18 and under 40. It is intended solely for first-time buyers or people saving for retirement, and you can only withdraw money to purchase your first home or after you turn 60 (for retirement use).

How does a Lifetime ISA work?

Now, onto the nitty-gritty. When you deposit money into your LISA, you will receive yearly 25% bonus payments on top of any additional interest or investment gains, with the maximum bonus being £1,000 per year. You can put in a maximum of £4,000 every year until you turn 50 or until you use the funds to contribute towards your first property purchase.

If you, for example, contribute £1,000 per year to your LISA, you will receive an additional £250 bonus. As you can see, the more you can afford to save, the higher your bonus payments will be.

You can use other types of ISAs alongside the LISA. However, it is important to remember that the Lifetime ISA limit of £4,000 per year contributes towards your annual ISA allowance of £20,000 (2024/2025).

There is a high penalty of 25% for withdrawing Lifetime ISA savings early! While this may not sound too damaging since the government gives you a 25% boost, due to compound interest, you can actually end up losing money for early withdrawals. So always be cautious when considering locking away your savings, and only deposit money you don’t immediately need.

How can a Lifetime ISA be used for a house deposit?

Once you have saved up your desired amount and found your dream home, you can use the LISA savings and government bonus to contribute towards your new house deposit. With enough funds, you could potentially reduce the amount you need to borrow and get a better mortgage deal with lower interest rates.

You can use a LISA to purchase a property, as long as:

  • You’re a first-time buyer
  • The property is under £450,000
  • You purchase the property at least one year after making the first LISA payment
  • You’re using a traditional repayment mortgage
  • You will also need a solicitor who will help you access the funds from your Lifetime ISA provider

Purchasing your new home with a partner? Well, the good news is that you can both open a Lifetime ISA and benefit from double the rewards, as long as you are both first-time buyers.

When is the best time to apply for a Lifetime ISA?

While the perfect time to open your Lifetime ISA will depend on you and your current situation, the sooner you can open it, the sooner you can make the most of the financial gains.

For instance, if you max out your savings and put £4,000 per year into your LISA, you could get an additional £1,000 per year in savings. Saving this amount for five years will give you a £5,000 boost for your new house deposit – the rewards do add up!

We understand that saving the maximum amount might be tricky, especially if you rent privately and have bills to pay. However, any additional funds could be helpful, right?

Is a Lifetime ISA right for everyone?

Lifetime ISAs are aimed at two groups: those who have yet to buy their first-ever home or those who want to save for retirement. That being said, even if you fit into these two boxes, the Lifetime ISA still might not be right for you.

It all depends on your current situation and your financial goals.

However, if you’re a first-time buyer and have at least a year or so until you’re ready to buy your dream home, then a LISA can be your golden ticket to getting additional funds for your deposit. As we mentioned earlier, the sooner you open one, the more you’ll be able to earn.

Advantages of a Lifetime ISA

The main advantage of opening a LISA is the ability to boost your savings with the generous government bonus. For every £1 you put in, you’ll get an additional 25p from the government, up to a maximum of £1,000 per tax year.

  • Boost your house deposit savings by 25%
  • Tax-free interest and investment growth
  • Flexibility to use for your first home or retirement

Disadvantages of a Lifetime ISA

Is it really free money? While you do get a decent government bonus, certain terms and conditions apply to access the bonus payments. These might not be favourable for all first-time buyers.

  • 25% penalty for withdrawing the funds early
  • Property purchase is limited to £450,000 or less
  • Age restriction for opening a LISA (over 18 years and under the age of 40)

Are you a first-time buyer looking for a mortgage? Get in touch with Bliss

At Bliss Financial, we understand that while it is an exciting time, buying your very first home takes time and can come with a handful of challenges. With lots to consider, such as how much deposit you need and where to get the best mortgage deal, sometimes you just need some expert support and guidance.

If you’re looking for friendly first-time buyer mortgage advice or a quick mortgage in principle for your dream property, you’re in the right place. At Bliss, we will support you through the home-buying journey, from our initial conversation right up to completion and beyond!

Get in touch today to discuss your situation, and let us help you find the best mortgage deals available.

Want to come fully prepared? Read our helpful guide for everything you need to know as a first-time buyer.

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Amanda Marsden

Amanda is the founder and owner of Bliss Financial. She has been helping clients with their mortgage and insurance needs for over 15 years. Her passion is to fully explore the options open to them and ensures the process is easy with no stress. She also specialises in helping clients invest in buy to let property and landlords.

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Selected from a number online because they stated that they have experience working with people from the military. This was essential given how moving on assignment often can be a negative for many banks when it comes to lending. Amanda was excellent and the process was swift and easy. We had planned to visit face to face but the process was just as high quality over zoom and phone.
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Amanda is great, everything was explained clearly and always responsive to queries, would highly recommend.
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This is my second time remortgaging through Bliss and Amanda. The service provided has made my life stress free and Amanda was thorough with her research into what deal and term would be best for me based on economic uncertainty and where I am atthis point of my life.I'd not use any other mortgage broker ✨
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Amanda was extremely knowledgeable and helpful from minute one. I am very grateful to her for diligently working within a fairly tight timeframe to identify and provide me with the right product.Her communication throughout was prompt and well-received. I look forward to using her services again.
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Excellent service. Fully deserving of 5 stars. Nothing to fault. Great communication and everything went through in time with no issues. Would highly recommend Amanda Marsden.
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Amanda was absolutely brilliant from start to finish. She helped us secure our forever home mortgageWould 100% recommend for anyone needing financial services of any kind!
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Absolutely perfect service from start to finish, no stress, no hassle can’t recommend enough. Thankyou
sarah W.
We have used Amanda for many years. She knows exactly what she is talking about and offers the best advice. I cant recommend Amanda enough if you're thinking of getting a mortgage or going through a Re-Mortgage. She reassured us throughout the whole process and was in touch every step of the way. Thank you Amanda, here's to many more years.
David J.
Amanda was amazingly helpful and made the whole process hassle free. Even when I changed my mind a few times nothing was a problem and the end result was exactly what I was looking for. I would highly recommend Amanda and the team
Atha D.
We used Amanda a few years ago for our first mortgage. She was an absolute hero for us. She sat us down and explained everything thoroughly putting all out worries at ease as first time buyers. We had issues with our chain which meant our mortgage offer lapsed and Amanda was there every step of the way right through to the day we moved in. Due to remortgage in the next year or so and I will always go back to Amanda.
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Once again very helpful and prompt in helping us with remortgaging our property, highly recommended
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Bliss WILL get you the best mortgage solution possible. The best mortgage broker around!!
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Amanda was absolutely brilliant from start to finish. She helped me secure my first mortgage and also helped with organising the best deals on life and home insurance for my house. Would 100% recommend for anyone needing financial services of any kind!
Nathan C.
We specifically selected Bliss as financial advisors for our mortgage, as we'd read great reviews from other first time buyers. Amanda was so welcoming and helpful, introducing us to the whole process. We actually went to her thinking we were fish out of water, and wanting to but not expecting to but for a few years, just wanting to get our heads around it. However everything felt easy, quick and well explained and we were accepted for a within approx 2 months of starting our search. Amanda has been amazing throughout the entire process - even personalising the way she presented documents to us to suit our styles (me, needing to talk everything out and my partner more graphs and charts!). Evening appointments were organised to work around our work schedules. She was in constant communication with all stakeholders, chasing things up for us and since moving, also supporting with insurances. I'd highly recommend Bliss, and specifically Amanda for any financial advisory services however particularly first time buyers, as no question feels like a silly question. For future purchases, selling, and any other financial services - we will definitely return to Bliss.
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Great service. Professional, friendly and efficient. Amanda did a great job in advising me and then finding and securing the best mortgage to suit my situation
Ed T.
Absolutely amazing service, couldn't have received any better. Very friendly and quick at replying to all enquiries. Very understanding of our circumstances which were difficult but still got us everything we needed for our new house. Thank you again Amanda, will be recommended you to everyone who needs a mortgage broker ☺️
Stacey G.
Amanda helped us to secure our first mortgage. She was on hand for support all the way through the process and very helpful in explaining things in a more simple way to help us to understand. She kept in contact with us regularly throughout the process and really made us feel at ease. We cannot thank Amanda enough for her support and help.
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I came across Bliss financial solutions by google search when desperately trying to find a mortgage advisor who could do the impossible (secure a DiP quickly, that met my difficult short term self employment circumstances).Amanda from Bliss has been a pleasure to work with. The perfect balance of professional and friendly, incredibly organised and certainly not deterred by a challenge. I’m really grateful for the time and effort she put into my case to allow me to secure the house I wanted within the mandated timeframe. Thank you so much Amanda and Bliss for allowing us to get our new home 💜
heather U.
I just want to say how amazing Amanda at Bliss financial is!!. My partner and I were looking at buying a shared ownership prooerty and everything started happening very quickly ... but Amanda just took over from the start and literally kept me at ease the whole way . Herprofessionalism throughout was second to none and helped with every aspect of the process. Thanks to Amanda we now have the most beautiful home and we will be forever grateful for everything she has done for us. I would 100% recommend Bliss Financial.
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Excellent service. Amanda really took the stress out of remortgaging for us. Highly recommended
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Switching mortgages has always been a frustrating and time consuming experience but using Bliss made the process seamless and most importantly stress free! They were excellent and I would highly recommend their services.
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Amanda has been totally invaluable through our first home buying journey. Always on hand to answer the hundreds of questions with her excellent knowledge and guidance.I would absolutely recommend Bliss Financial Services.
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We have been in our new house for nearly 2 months now all thanks to Bliss Financial Solutions, Amy was amazing sorting our new mortgage out and talking us through everything we needed to know. Very smooth process with good communications. Thank you very much. 🙂
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I would like to thank Bliss Financial Solutions for amazing, professional and swift responses during the process of my first home purchase.It has been an absolute pleasure each time I have met you and will 100% have no hesitation for contacting you again for future requirements and highly recommending you.
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We have recently used Amy at Bliss to help us get a mortgage. After having a stressful time at high street banks and other mortgage brokers, we contacted Amy for help. Amy was absolutely excellent and the work she does is outstanding. Amy went above and beyond and managed to find us a mortgage in a matter of days. Throughout the whole process Amy kept us up to date and managed the mortgage application seamlessly despite a stressful time with other companies. I would like to express my many thanks to Amy and the team at Bliss for being so excellent and thanks to them we now have the keys to our new home.
My experience with Bliss Financial was excellent, everyone went above and beyond. Provided the best advice and more. Our mortgage was sort with out any stress. I will continue recommending to friends a family looking for mortgage advice.
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First class customer service, highly recommend Bliss Financial Solutions LTD to anyone that values a professional, efficient and personal approach. Being first time buyer my partner and I had very limited knowledge around mortgages and all things connected. Amanda and her team went above and beyond to ensure we understood everything and provided advice when we had any questions with immediate response. Bliss financial limited we thank-you kindly for making the whole mortgage process so easy, you took all the strain off us especially need due to the birth of our daughter 3 weeks ago you made the mortgage process easy and hassle free. I will definitely be a customer for life and if there is anyway I can share your company’s profile on social media please let me know as I would love to recommend your service to others.Many thanks Melissa Hodgson, Andrew and Eloise - three very happy customers 😊
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We used Bliss to re morgage our property. Amy was absolutely fantastic, made everything feel really easy, she was clear in all her explanations, open and honest with setting expectations, and really knowledgeable. The whole process was really smooth. We also discussed life insurance which was something of a priority giving we had just had a little boy recently. Amazing service. Would highly recommend. We will definitely be using again for any future mortgage or insurance needs.
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Efficient and friendly. The team helped source the most appropriate mortgage for us at a very busy and pressured time for interest rates and timeframes. They were very helpful in expediting the completion when our solicitors were holding up proceedings. The little gift afterwards was much appreciated also. Would recommend.
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Bliss Financials was a vital part of my journey to home ownership in the UK. They always gave personalized yet professional advice and were always accessible and responsive all through the process. They were very thorough, transparent and client centered; offered and discussed all the available options to enable me make an informed choice. I would totally and wholeheartedly recommend their services and I am very grateful to Amy who handled most of the process as well as Amanda and Sophie. Great team/firm!
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I would like to praise the excellent service of the Bliss Financial Solutions LTD.I have a brilliant experience with this company. I was buying a house for the first time and Bliss Financial advised me on every step of the process (mortgage, insurance), offering me suitable options that I could choose from. I always got great offers and still was in control.All members of the team (Amy, Sophie, Amanda) are brilliant, very professional, friendly and responsive.I am very grateful to Amy (my consultant) as she did help me very much throughout the process, nothing was a problem,I received responses straight away and she also prompted other parties to act swiftly (lender, insurance companies, solicitor, etc.).If I need mortgage or insurance in future, I will definitely ask Bliss Financial for help again.
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I am now on my second mortgage which was arranged using Bliss. What an outstanding service. From start to finish the Bliss team were great in answering queries that I had. They even pushed to get me an extension to my offer seeing me secure a great rate before the recent rises. This certainly helped me secure my dream home. I would recommend Bliss to anyone who is after a professional and personable mortgage advisor.
Amanda worked extremely hard and was really efficient is securing a fixed deal for me at a time when rates were being removed across the board. I would recommend them to anyone.
Andrew M.
Excellent from start to finish. Every decision and option were made clear to us about the implications and any questions we had were answered in a timely manner, making remortgaging easier than I imagined it would be. Thank you to Bliss Financial Solutions for excellent service and attention to personal details that really made us feel like our priorities were put first. We will use again at our next remortgage and would recommend to anyone.
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Excellent company, fast and responsive and a professional outfitI appreciate Amy’s swift advice on a deal to secure a good rate 12hrs before the rate changed
Adam L.
What a fantastic service. I contacted Amanda via a friend recommendation. She was friendly and helpful. She passed me to Amy who was my advisor for the whole process.As a first time buyer, I was like a rabbit in the headlights. But Amy reassured me and made the whole thing a breeze, with regular contact and updates along the way.Thank you to you all.Highly recommend 😁See you when it's time to remortgage 😉
Steven R.
We have used Bliss/Amanda for a number of mortgages now and the service has always been second to none!We have had complicated financial situations that the Bliss team have used their extensive knowledge to support and ensure we receive the best product for us.We always recommend Bliss to all our friends and family!Thank you to Amanda, Amy and Sophie
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The staff are amazing and very helpful throughout the whole process, the rates are very competitive and the after sales service is second to none, I would highly recommend Bliss Financial to anyone.MarkAspire Property Rentals
Mark L.
Any Lyons found us an excellent mortgage deal and then helped us through a long complex legal process regarding the house. She was there for us all the way through keeping us informed and chasing up when there were delays, Thank you Amy and her team.
Ken W.
Amy has been amazing from the start of our process as first time buyers until completion. We had a few delays along the way due to waiting on a new build but Any was there to guide us through every step of the way to help us rearrange another mortgage and kept us regularly updated on the process. I have already recommended her to friends and family and wouldn’t hesitate to use her again when we remortgage.
Melissa N.
Really happy with the service from Amy and Bliss Financial Solutions - Amy made sure everything was as straight forward as possible, was super communicative and really easy to deal with. Would not hesitate to recommend them.
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Amanda was very helpful. Gave advice over a number of options for my situation. Many other companies didn't even bother calling me back. Will definitely go back to Bliss again in the future.
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