Conveyancing in Langport, Yeovil, Bridgwater and Somerset

Yes — you can use a Lifetime ISA to buy a home, but only if you’re a first‑time buyer purchasing a property in the UK worth £450,000 or less, with a mortgage, and your LISA has been open for at least 12 months to avoid the 25% withdrawal penalty.

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Understanding the Lifetime ISA for Home Buyers

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A Lifetime Individual Savings Account (LISA) is a UK government‑backed savings product for people aged 18 to 39, designed to help them save for either their first home or for retirement. You can save up to £4,000 per tax year, and the government adds a 25% bonus on what you put in, up to £1,000 annually. This bonus can dramatically boost your deposit savings and make owning your first home more achievable.

 

Eligibility Criteria for Using a LISA to Buy a Property

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To use your LISA savings and bonus towards your first home, you must:

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• Be a first-time buyer (have never owned residential property anywhere in the world).

• Be buying a property priced £450,000 or less.

• Intend to live in the property as your main and only residence.

• Purchase the property with the aid of a mortgage — cash purchases and buy-to-let mortgages do not qualify.

• Have held your LISA account for at least 12 months before withdrawing for a purchase.

• Use a conveyancer or solicitor to handle the purchase and apply for the bonus on your behalf.

 

How the LISA Fund Release Process Works

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1. Tell your conveyancer early that you will be using a LISA to help fund the purchase.

2. Complete the required forms:

   • Investor Declaration Form (you complete this)

   • Conveyancer Declaration Form (your conveyancer completes this) — both are available from your LISA provider.

3. Submit forms to the LISA provider — the conveyancer will send both forms to request the release of funds.

4. Processing time — some providers require up to 30 days’ notice to release funds.

5. Transfer of funds — the savings and the government bonus are sent directly to your conveyancer shortly before your completion date.

6. Holding period — your conveyancer can hold the funds for up to 90 days while the purchase completes.

7. Extensions — if your purchase takes longer than 90 days, your conveyancer can request an extension from your provider.

8. If purchase falls through — the money must be returned to your LISA account without penalty.

 

Important LISA Rules and Restrictions for Home Purchases

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• Government bonus — you can only claim the bonus from either a LISA or a Help to Buy ISA, not both.

• Annual savings limit — you can save up to £4,000 into your LISA each tax year, receiving a 25% bonus (up to £1,000 annually).

• ISA allowance — LISA contributions count towards your overall yearly ISA limit (£20,000 for 2024/25).

• Maximum property value — £450,000 anywhere in the UK.

• Couples buying together — both can use their own LISAs if both are eligible first-time buyers.

• Connected party mortgages — you cannot use a LISA with a mortgage from a connected party (e.g., family member).

• Early withdrawal charge — if you withdraw for a non-qualifying purpose, you’ll pay a 25% penalty on the withdrawn amount.

• Self-build eligibility — you may use a LISA to buy land for a self-build if all criteria are met.

• Monies must be used in the UK — you cannot purchase overseas property with a LISA bonus.

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Practical Tips to Avoid Delays

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• Start the process early — inform your conveyancer as soon as your offer is accepted.

• Check your timelines — make sure your LISA meets the 12-month holding requirement before planning for completion.

• Get your forms ready — the Investor Declaration and Conveyancer Declaration are essential and must be completed accurately.

• Know your provider’s rules — each LISA provider may have slightly different turnaround times and requirements.

• Have a backup plan — in case completion is delayed beyond 90 days, so you can apply for an extension without stress.

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Recent Developments (as of 2025)

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The Treasury Committee is reviewing the LISA’s performance nine years after its introduction. Areas under discussion include:

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• Raising the £450,000 property price cap to reflect market increases.

• Adjusting or removing the 25% early withdrawal charge.

• Simplifying the process for first-time buyers who also hold a Help to Buy ISA.

 

No formal changes have been enacted yet, but staying updated will help you plan.

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Frequently Asked Questions About Using a LISA for a First Home

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Q1: Can I use my LISA before it’s been open for a year?
Not without incurring the 25% withdrawal penalty, which will take away part of your savings and bonus.

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Q2: Can I combine my LISA with a Help to Buy ISA bonus?
No — you may only use the bonus from one scheme for the same property purchase.

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Q3: What if my property costs more than £450,000?
The purchase will not qualify for the bonus. Any withdrawal for this purpose would incur the 25% government penalty.

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Q4: My partner also has a LISA. Can we both use them?
Yes — if you are both first-time buyers and each account has been open for at least 12 months.

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Q5: What happens if my purchase falls through?
The funds (and bonus) must be returned to your LISA account with no penalty.

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Q6: Who applies for the government bonus?
Your conveyancer applies for it through your LISA provider — you cannot claim it yourself.

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Q7: Can I use my LISA for a self-build project?
Yes — you can use it to buy qualifying land and for the build, provided you meet the overall criteria and limits.

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Q8: Does a LISA affect my mortgage offer?
The lender will simply consider your total deposit funds. LISAs usually make your deposit stronger in the eyes of lenders.

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Q9: What’s the maximum I can contribute each year?
£4,000 into your LISA per tax year, with a 25% bonus from the government.

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Q10: How long can the conveyancer hold my LISA funds?
Up to 90 days, with a possible extension if needed.

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Key Facts for First-Time Buyers Using a LISA

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• Must be a UK resident aged 18–39 to open.

• Account must be open for 12 months minimum before penalty-free use.

• Annual saving limit: £4,000.

• Government bonus: 25% (up to £1,000 p.a.).

• Max property price: £450,000.

• Eligible purchases only — main residence in the UK.

• Government bonus cannot be combined with a Help to Buy ISA bonus.

• Both buyers in a joint purchase can use separate LISAs if eligible.

• Withdrawals for ineligible purposes incur a 25% charge.

• Funds paid directly to your conveyancer before completion.

• If the sale fails, funds must be returned to your LISA.

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