By the UKPropertyCalculator team • Published 28 September 2026
First-time buyers get tangled up in this comparison all the time. It comes in two forms: "I've got a Help to Buy ISA from a few years back — should I switch to a LISA?" And from someone starting from scratch: "Which one should I open?"
Here is the answer that too many articles bury at the bottom: if you do not already have a Help to Buy ISA, there is nothing to compare. The scheme closed to new applicants on 30 November 2019. For anyone without an existing account, the Lifetime ISA is the only government-bonus option in 2026 — though, as of this summer, the government is consulting on replacing it. More on that below; it does not change what you should do today, which is open one.
If you do have a Help to Buy ISA — opened before that cutoff — the comparison is worth working through carefully. There are specific situations where keeping your old account makes sense. There are more where switching focus to the LISA wins decisively.
The Help to Buy ISA was a government scheme that let first-time buyers save up to £200 per month into a dedicated cash ISA, with an optional larger payment of up to £1,200 in the opening month. For every £200 saved, the government added £50 — a 25% top-up, up to a maximum government contribution of £3,000. To claim that full £3,000 bonus, you needed to have saved £12,000.
The scheme was popular. At £200 a month it felt manageable, and the 25% bonus felt generous. But two limitations are worth understanding clearly before you plan around it.
First, the property price cap. Outside London, the Help to Buy ISA can only be used on properties costing £250,000 or less. In London, the limit is £450,000. This cap was set when the scheme launched in 2015. It looked reasonable then. Against prices in much of southern and central England today, it is significantly tighter.
Second, the deadlines. GOV.UK is specific about both: you can pay into the account until November 2029, and you can claim the 25% bonus until November 2030. So if you have a Help to Buy ISA you have not been actively contributing to, you have roughly three years of paying-in window left — and the total lifetime bonus is capped at £3,000 regardless of how long you keep at it.
There is also a floor. The minimum bonus is £400, which means you need at least £1,600 in the account before a bonus can be claimed at all. Anyone who opened an account, paid in a couple of hundred pounds and forgot about it has nothing to claim.
One more mechanics point that catches people out: the bonus is not paid to you. It goes directly to your conveyancer on completion day. This means you cannot use it as an exchange deposit — only for legal completion. If you need to demonstrate funds at exchange, your Help to Buy ISA balance does not count as available cash at that stage.
The Lifetime ISA launched in April 2017. You can contribute up to £4,000 per tax year, and the government adds a 25% bonus on whatever you put in — so a maximum £1,000 government top-up per year. To open a LISA, you must be aged 18 to 39. Once open, you can contribute until you turn 50.
The money can be used for two purposes: buying your first home on a property costing up to £450,000, or retirement from age 60 onwards. If you withdraw for any other reason, you pay a 25% withdrawal charge — I will explain in a moment why this hurts more than most people expect.
For property purchases, one rule matters: the account must have been open for at least 12 months before you can use it. If you open a LISA today and find your flat in nine months, you cannot use the funds for that purchase. This is why I tell anyone without a LISA to open one immediately — not when they are seriously looking, but today — so the 12-month clock starts running.
The LISA can be held as cash or invested in stocks and shares, depending on your provider. For money you plan to access within five years, a cash LISA is lower risk. For a longer horizon, a stocks-and-shares LISA can give the bonus extra room to grow.
This is the part most comparison guides have not caught up with. On 22 June 2026 the Treasury opened a consultation on a new First Time Buyer ISA — in its own words, "a new, simpler ISA product to support first time buyers to buy a home" which "once available … will be offered in place of the Lifetime ISA". The consultation closed on 18 August 2026 and the outcome has not been published.
What that does and does not mean, as things stand:
My read: open the LISA anyway. Someone who opens one now and buys in two years is in a strictly better position than someone who sits on their hands waiting for a product that has not been designed yet. If the rules improve later, they improve around money that has already collected a 25% bonus.
Here is what the two schemes look like side by side.
| Feature | Help to Buy ISA | Lifetime ISA |
|---|---|---|
| Open to new applicants? | No — closed 30 Nov 2019 | Yes, if aged 18–39 |
| Annual contribution limit | £2,400 (£3,400 in yr 1) | £4,000 |
| Government bonus rate | 25% | 25% |
| Maximum annual bonus | £600 (£850 in yr 1) | £1,000 |
| Maximum total bonus (lifetime) | £3,000 (on £12,000 saved) | £33,000 (18 to 50) |
| Property price cap — outside London | £250,000 | £450,000 |
| Property price cap — London | £450,000 | £450,000 |
| Last date you can pay in | Nov 2029 (bonus claimable to Nov 2030) | No end date set — but see the 2026 consultation above |
| Withdrawal penalty | None (lose the bonus) | 25% charge on full amount |
| Minimum account age for property use | None | 12 months |
The headline advantages for the LISA are clear: higher contributions, larger annual bonus, higher property cap, and no closing deadline. The one advantage the Help to Buy ISA holds — no withdrawal penalty and no minimum account age — matters in specific circumstances, which I will address.
The £250,000 outside-London cap is the single most underappreciated feature of the Help to Buy ISA. Let me explain why it matters in practice.
Say you have been saving into a Help to Buy ISA for four years. You have accumulated £9,600 in contributions and are on track for a £2,400 government bonus. Then you start seriously looking at properties. The one-bed flat you could afford in 2021 for £225,000 has moved to £260,000. Or you decide you want a two-bed. Or you and your partner combine finances and your target shifts to something bigger.
At £260,000, your Help to Buy ISA bonus is not reduced. It is forfeited entirely. There is no partial credit, no tapering, no appeal mechanism. The cap is a cliff edge, not a slope.
The LISA cap of £450,000 applies everywhere in the UK. That covers the vast majority of first-time buyer purchases in every city we cover in our locations hub. You would need to be buying in central London or the higher end of the South East commuter belt to bump into it.
Buyers can run into the Help to Buy ISA cap on the day their solicitor tries to claim the bonus. Nobody may have mentioned the cap during years of saving, and a letter from the ISA provider is easy to ignore. The outcome is that government money the buyer was counting on does not arrive.
If there is any realistic chance you will end up above £250,000 — and in most parts of England outside the North, there is — the Help to Buy ISA bonus is something you should plan around carefully, not rely on.
The LISA withdrawal charge is 25% of the amount withdrawn. Most people hear this and think: fair enough — 25% is the same rate as the bonus, so I just lose the government top-up and get my own money back. That is not what happens.
Here is the actual maths:
The effective penalty on your original contributions is 6.25%, not 25%. The government is not simply clawing back its bonus — it is taking a slice of yours too. This is intentional. The LISA is designed to lock money into either a property purchase or retirement, and the penalty structure enforces that.
The practical upshot: the LISA is excellent for saving towards a first home below £450,000. Do not put money into it that you might need for other purposes. And if you are buying in London where prices can push above the cap, model your likely purchase price carefully before deciding how much to contribute.
Let us make the difference concrete. You are 28, hoping to buy your first home and can save £4,000 per tax year — roughly £333 a month.
Option A — you have a Help to Buy ISA from 2019 and continue at the maximum rate.
Your maximum monthly contribution is £200 (you missed the first-month £1,200 bump years ago). Over three years: £200 × 36 months = £7,200 in contributions. Government bonus at 25%: £1,800. Total: £9,000 before interest.
Option B — you open a LISA today and max it out over three years.
Three years at £4,000 per year: £12,000 in contributions. Government bonus: £3,000. Total: £15,000 before interest.
| Help to Buy ISA (3 yrs, max) | LISA (3 yrs, max) | |
|---|---|---|
| Your contributions | £7,200 | £12,000 |
| Government bonus | £1,800 | £3,000 |
| Total (before interest) | £9,000 | £15,000 |
| Property price cap (outside London) | £250,000 | £450,000 |
The LISA produces £6,000 more in total savings after three years at the same annual contribution rate. The difference grows every year, because the LISA's annual contribution ceiling is £1,600 higher — and that gap compounds both through saved capital and through additional government bonus.
The LISA also gives you more flexibility. You are not locked into the £200-per-month drumbeat. You can contribute a lump sum at any point in the tax year up to your £4,000 limit, which suits buyers whose income is irregular or who receive an annual bonus.
Use our mortgage calculator to see what a larger deposit actually does to your monthly payments — the jump from a 5% deposit to a 10% deposit can save you well over £100 a month in interest, which often outweighs months of extra saving time.
Some buyers — those who opened a Help to Buy ISA before November 2019 and later opened a LISA — have both. This is perfectly legal. You can pay into both simultaneously within your overall ISA allowance rules.
The constraint: you can only use one government bonus towards a single property purchase. When the time comes, you choose which bonus to claim.
In most cases, the LISA bonus will be larger in absolute terms — because its annual cap is higher and it has no lifetime ceiling until age 50. After three years of maxing both, your LISA will have accumulated £3,000 in government bonuses. Your Help to Buy ISA will have accumulated a smaller amount, and it maxes out permanently at £3,000 regardless of how long you continue saving beyond year five.
The scenario where the Help to Buy ISA bonus is worth considering instead: if you are buying below £250,000 outside London AND your LISA was opened within the last 12 months (making it ineligible for a property purchase). In that specific window, the Help to Buy ISA is available to use immediately while your LISA matures.
Before you close a Help to Buy ISA you are not using, check with your solicitor. The cash in the account is yours regardless; closing early is simply a question of timing and whether the account balance is earning meaningful interest.
Under 40, no Help to Buy ISA: Open a LISA immediately. Contribute something today — even £1 — to start the 12-month clock. Build contributions once the account is active.
Have a Help to Buy ISA, buying outside London above £250,000: Your Help to Buy ISA bonus is not available for the purchase. Open a LISA if you are under 40 and have not already done so. Leave the Help to Buy ISA open as a standard cash ISA if it is earning reasonable interest, but do not treat the government bonus as money you will receive.
Have a Help to Buy ISA, buying below £250,000: Run the numbers. If your LISA is mature (open more than 12 months) and has accumulated a larger bonus, use the LISA. If the LISA is under 12 months old and you are buying soon, the Help to Buy ISA bonus is your only available option.
Aged 40 or over, cannot open a LISA: The Help to Buy ISA is what you have. Be aware of the 30 November 2029 account deadline and the property price cap. Read through the total cost of buying guide to make sure your ISA savings cover the full upfront cost picture, not just the deposit.
If you are thinking of buying but unsure whether buying is even right for your circumstances: Use the buy vs rent calculator to compare the actual long-run cost of buying versus renting at your specific price and rent levels. A LISA is only useful if you are actually going to buy — if the numbers suggest renting is better for your situation, the LISA's 6.25% effective withdrawal penalty makes it an expensive savings vehicle for any other purpose.
For a broader picture of all the costs that sit alongside your deposit on purchase day, the first-time buyer guide covers the full process from saving to exchange.
No. The scheme closed to new applicants on 30 November 2019. If you do not already have one, the Lifetime ISA is the only government-bonus savings account you can open for a first home purchase.
You can contribute up to £4,000 per tax year and receive a maximum £1,000 government bonus per year. If you open a LISA at 18 and max it out every tax year until you turn 50, the lifetime total government bonus reaches £33,000 — or £32,000 if you happen to be born on 6 April, which costs you a contribution year.
If you withdraw for anything other than a qualifying property purchase (under £450,000), terminal illness, or reaching age 60, you pay a 25% charge on the full withdrawal amount including the government bonus. Because the charge hits the whole pot, you receive back less than you contributed — effectively losing around 6.25% of your own money.
No. If you have both a Help to Buy ISA and a LISA, you can save into both, but you may only use one government bonus towards a single property purchase. You choose which at the time of buying.
£250,000 outside London and £450,000 in London. If the property costs a single pound above these limits, the government bonus is forfeited entirely — there is no partial allowance. The LISA's cap is £450,000 everywhere, which removes this cliff-edge risk for most buyers outside London.
Model the full picture before you commit
Your ISA is the deposit. But stamp duty, legal fees, surveys, and mortgage costs add thousands more. Use our calculator to stress-test your total position.
Stamp Duty Calculator →Sources: GOV.UK — Lifetime ISA; GOV.UK — withdrawing money from your Lifetime ISA; GOV.UK — Help to Buy ISA; HM Treasury — First Time Buyer ISA consultation (22 June to 18 August 2026); lifetime-bonus arithmetic cross-checked against MoneySavingExpert. All scheme figures checked against these pages on 28 September 2026. This article is for information only — see our Disclaimer.