Savings & Investing
Lifetime ISA vs Help to Buy ISA — Which Is Better?
Comparing Lifetime ISA and Help to Buy ISA for first-time buyers. Bonuses, limits, rules, and which one you should choose.
Both accounts offer bonuses for first-time buyers, but they work differently.
Quick Comparison
| Feature |
Lifetime ISA |
Help to Buy ISA |
| Status |
Open |
Closed to new accounts |
| Government bonus |
25% |
25% |
| Annual limit |
£4,000 |
£2,400 (£200/month) |
| Max bonus per year |
£1,000 |
£600 |
| Lifetime max bonus |
Unlimited (to age 50) |
£3,000 |
| Property price limit |
£450,000 |
£250,000 (£450k London) |
| Can use for retirement |
Yes |
No |
| Age limit |
18-39 to open |
Was 16+ |
Help to Buy ISA — Key Facts
Current Status
| Status |
Details |
| New accounts |
Closed (November 2019) |
| Existing accounts |
Can still deposit |
| Final deposits |
November 2029 |
| Final bonus claims |
November 2030 |
If You Have One
| Feature |
Details |
| Keep depositing |
Up to £200/month |
| Bonus earned |
25% of balance |
| Maximum bonus |
£3,000 (on £12,000) |
| Property limit |
£250,000 (£450,000 London) |
| When paid |
At completion (not exchange) |
HTB ISA Limitations
| Issue |
Impact |
| Lower monthly limit |
Only £200/month |
| Lower total bonus |
Capped at £3,000 |
| Property price cap |
Restrictive in many areas |
| Bonus timing |
Paid at completion, not exchange |
| Can’t use for retirement |
Only for property or withdraw |
Lifetime ISA — Key Facts
How It Works
| Feature |
Details |
| Contribute up to |
£4,000/year |
| Government adds |
25% (up to £1,000/year) |
| For |
First home OR retirement |
| Age to open |
18-39 |
| Age to use for property |
Until 60 (after that it’s only for retirement) |
| Property limit |
£450,000 |
LISA Advantages
| Advantage |
Details |
| Higher annual limit |
£4,000 vs £2,400 |
| Higher annual bonus |
£1,000 vs £600 |
| No lifetime cap |
Keep saving until 50 |
| Retirement backup |
Use at 60 if don’t buy |
| Higher property cap |
£450,000 everywhere |
| Bonus timing |
Before buying (during savings) |
LISA Withdrawal Penalty
| If Withdraw Early |
Penalty |
| Not for property or retirement |
25% penalty on withdrawal |
| Effect |
Lose bonus plus some of your own money |
| Example |
Put in £4,000 + £1,000 bonus = £5,000. Early withdraw: lose £1,250. Get back £3,750. |
Detailed Comparison
Contribution Limits
| Timeframe |
Lifetime ISA |
Help to Buy ISA |
| Year 1 max |
£4,000 |
£3,400 (£1,200 first month + £200 x 11) |
| Year 2+ max |
£4,000 |
£2,400 |
| Over 5 years |
£20,000 |
£12,800 |
| Over 10 years |
£40,000 |
£25,200 |
Bonus Earned
| Savings |
LISA Bonus |
HTB ISA Bonus |
| After 1 year (max) |
£1,000 |
£850 |
| After 5 years (max) |
£5,000 |
£3,000 (capped) |
| After 10 years (max) |
£10,000 |
£3,000 (capped) |
Property Price Limits
| Location |
LISA |
HTB ISA |
| Anywhere in UK |
£450,000 |
£250,000 |
| London only |
£450,000 |
£450,000 |
Which Should You Use?
Use Lifetime ISA If
| Situation |
Why LISA |
| Don’t have HTB ISA |
Only option now |
| Can save £200+/month |
Maximise the bonus |
| Buying above £250k |
HTB ISA won’t work |
| Want retirement backup |
Flexibility if don’t buy |
| Have years to save |
More time = more bonus |
Keep HTB ISA If
| Situation |
Why Keep |
| Already maxed out |
Have £12,000 saved |
| Buying very soon |
No time to build LISA |
| Risk-averse about penalty |
HTB ISA has no penalty |
| Under 18 |
Can’t open LISA yet |
Have Both?
| Key Rule |
Details |
| Can hold both |
Yes |
| Can use both bonuses |
NO — only one per property |
| Strategy |
Use whichever has higher bonus at purchase time |
| Other account |
Becomes regular ISA |
Transferring HTB ISA to LISA
How to Transfer
| Step |
Details |
| Open LISA |
If under 40 |
| Request transfer |
To LISA provider |
| Counts toward limit |
£4,000 annual cap |
| No bonus on transfer |
LISA bonus applied after |
Example
| Situation |
Details |
| HTB ISA balance |
£5,000 |
| Transfer to LISA |
Counts as £4,000 this year + £1,000 next year |
| Or |
Transfer £4,000, keep £1,000 in HTB ISA |
| Then |
LISA earns 25% bonus going forward |
If You Don’t Buy a Property
Lifetime ISA
| Option |
Details |
| Keep until 60 |
Use for retirement |
| Withdraw early |
25% penalty |
| Terminal illness |
Can withdraw penalty-free |
| Death |
Passes to estate |
Help to Buy ISA
| Option |
Details |
| Withdraw |
Get your savings, not bonus |
| No penalty |
Just lose the potential bonus |
| Becomes |
Normal cash savings |
Summary: Quick Decision
You Should Open a LISA If
| Criteria |
Check |
| Aged 18-39 |
☐ |
| First-time buyer |
☐ |
| Property under £450,000 |
☐ |
| Can leave money 12+ months |
☐ |
| Okay with penalty risk |
☐ |
Stick with HTB ISA If
| Criteria |
Check |
| Already have one with good balance |
☐ |
| Buying very soon |
☐ |
| Under 18 |
☐ |
| Want zero risk of penalty |
☐ |
Can’t Open Either If
| Situation |
Why |
| Already own/owned property |
Not first-time buyer |
| Over 40 |
Can’t open new LISA |
| Don’t have HTB ISA |
Can’t open new one |
Key Numbers
| Feature |
LISA |
HTB ISA |
| Max annual bonus |
£1,000 |
£600 |
| Max lifetime bonus |
No cap |
£3,000 |
| Property price cap |
£450,000 |
£250,000 |
The Lifetime ISA is the better choice for most first-time buyers saving for a deposit. The higher contribution limits and uncapped lifetime bonus make it more generous. Only keep a Help to Buy ISA if you already have significant savings in one and are buying very soon.