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Lifetime ISAs let you earn a 25% bonus on your savings towards your first home or retirement. But what's the catch? We explain how LISAs work, the pros and cons, what the government has planned and - most importantly - how to find the best lifetime ISA.
For more of November 2026’s best Lifetime ISAs (cash), read on.
A Lifetime ISA, or LISA for short, is a type of account designed to encourage people to save for their first home or their retirement.
Anyone aged 18-39 can open a Lifetime ISA and you can save up to £4,000 each tax year into it and the government will give you a 25% bonus on your contributions, up to a maximum of £1,000 per year.
This government top-up definitely makes it a product worth considering to boost your savings.
Lifetime ISAs have proved popular: since they were introduced in 2017, 6% of adults who have ever been eligible have opened a LISA with around 1.3 million accounts still open, according to the government figures.
Latest update: The government has confirmed that a new First Time Buyer ISA will replace the Lifetime ISA for new accounts from April 2029. Existing LISA holders will be able to keep their accounts, including for retirement. Read more about the changes below.
But with so many providers offering them, you’ll want to make sure you pick the best Lifetime ISA.
You don’t have to make life’s big financial decisions alone. Get the right IFA for you today with our partners at Unbiased.
You can save into your LISA by putting in a lump sum, regular savings or just putting away money when you can. And the government will add a 25% bonus of up to £1,000 a year until you’re 50.
This means if you save the maximum £4,000 in a year you’ll get the full £1,000 bonus.
Government bonuses are usually paid monthly, based on the contributions you’ve made. It can take several weeks for the bonus to be added to your account.
There are two types of LISAs – cash LISAs and stocks and shares LISAs. But while you can hold more than one LISA at any given time you can only pay into one LISA in each tax year. This guide covers the best cash LISAs.
In the Autumn Budget on 28 October 2026, the Chancellor confirmed that a new First Time Buyer ISA will replace the Lifetime ISA for new accounts from April 2029.
He also announced a lower withdrawal charge for existing LISA savers buying a first home above the £450,000 property price limit.
From 29 October 2026, the withdrawal charge will fall from 25% to 20% if you use your LISA savings to buy a first home costing more than £450,000 and meet the other qualifying purchase rules.
This means you’ll lose the government bonus, but won’t face the additional penalty on your own contributions. For example, if you save £4,000 and receive a £1,000 bonus, a 20% charge on the £5,000 balance leaves you with £4,000, assuming no interest, investment growth or losses. Under the 25% charge, you would receive £3,750.
The 25% charge will still apply to other unauthorised withdrawals, such as taking money out before age 60 for a reason other than a qualifying home purchase or terminal illness. Speak to your provider before withdrawing money for a purchase above the cap so it is processed correctly.
The government has confirmed that:
You can open a Lifetime ISA until the new account launches. Existing LISA holders will be able to continue saving into and using their accounts under the existing rules, including for retirement, with the new reduced charge applying to qualifying purchases above the property price cap.
You can read the government’s First Time Buyer ISA consultation response.
HomeOwners Alliance CEO Paula Higgins says:
“We welcome the removal of the additional penalty for Lifetime ISA savers buying a home above the £450,000 limit. People saving responsibly for their first home should not lose part of their own savings simply because local property prices exceed the cap.”
“However, it is disappointing that the £450,000 property price cap will remain unchanged for both existing Lifetime ISAs and the new First Time Buyer ISA. Londoners buying above that threshold will continue to miss out on the government purchase bonus.
“The cap should reflect London’s housing market, rising to £500,000 in outer London boroughs and £650,000 in inner London boroughs. It should then increase annually in line with inflation to protect future buyers and prevent the value of this support from being steadily eroded.”
Paula notes that the limits differ from the new Your First Home Scheme, which will allow eligible purchases up to £500,000 in outer London and £650,000 in inner London. Buyers purchasing above £450,000 through that scheme won’t qualify for a LISA or First Time Buyer ISA purchase bonus.
Looking for the best Lifetime ISA? Here are our cash LISA top picks for this month:
| Provider | Rate (AER variable) | Accept LISA transfers? | How to open/manage | Interest paid |
|---|---|---|---|---|
| Moneybox | 4.75% (inc a fixed one-year bonus interest rate of 1.85% AER) | Yes (only if you haven’t had a Moneybox LISA before) | App | Underlying interest paid monthly; introductory bonus interest paid after 12 months. |
| Plum | 4.2% (inc 1.09% AER variable bonus in first year). | Yes. Different rates apply on transfers in. | App | Annually |
| Tembo | 4.00% (inc 0.45% AER fixed bonus in first year) | Yes. | App | Monthly |
| Paragon | 3.51% | Yes. | Online | Annually |
| Bath Building Society | 2.60% | Yes. | Open online; manage online/app/phone/branch | Annually |
If you want to put in the full £4,000 allowance a year and split payments equally over 12 months you can contribute £333.33 into your LISA per month.
| Monthly payment | Yearly payment |
|---|---|
| £333.33 | £4,000 |
If you open a LISA at 18 and add the maximum deposit of £4,000 per year until you’re 50 you’ll get the maximum bonus of £32,000.
If you’re looking for investment advice speak to an Independent Financial Adviser (IFA).
You don’t have to make life’s big financial decisions alone. Get the right IFA for you today with our partners at Unbiased.
The advantages of a LISA are:
The biggest advantage is the bonus rate of 25% which is extremely generous. The bonus you’ll receive is on contributions not on interest or investment growth.
Once your bonus is in your account it will be treated like the rest of your savings. This means you’ll earn interest on it if you have a cash LISA, or you’ll earn investment growth (or loss) if it is an investment LISA.
However, to get the most out of your LISA make sure you shop around to find the best Lifetime ISA – jump to our top Lifetime ISAs this month.
Another benefit is that you can use the Lifetime ISA money and government bonus to buy any qualifying first home (not just new builds) worth up to £450,000, or put it towards your pension income after you reach 60.
Saving to buy your first home? See our calculator to see how much you can afford to borrow
It might sound like opening a LISA is an obvious choice if you’re planning to buy your first home but there are some factors you’ll need to consider:
To find the best cash Lifetime ISA, check where you can get the best rate of interest and any other terms – see our top picks above.
While with a Stocks and Shares LISA you’ll want to check things like fees, the minimum investment and any other terms.
Once you have a LISA, you may be able to switch to another provider if it offers a better deal and accepts LISA transfers.
So keep tabs on your account and be prepared to switch to a different provider if you want to make sure you get the best deal. You can also switch providers if you have a stocks and shares ISA.
If you’ve ever owned a property before even if it’s not in the UK you can’t use your LISA savings towards buying a home. And this even includes if you inherited a property or even a share of one.
To be able to use your LISA savings and keep the government bonus, your home purchase must cost £450,000 or less. And you’ll need to take out a residential mortgage. So this means you can’t be a cash buyer or be buying a property that you plan to rent out.
For purchases above £450,000, the reduced 20% withdrawal charge applies from 29 October 2026, provided the other qualifying purchase rules are met.
If you want to use your LISA savings and the bonus towards buying your first home, you must have made your first payment into the account at least 12 months before you buy.
So if you’re hoping to get on the property ladder within the next year and haven’t yet opened and paid into a LISA, you won’t be able to use it towards that purchase.
So if you’re considering buying your first home in the future it may be a good idea to open an account as soon as possible – many providers let you open one with as little as £1. Then you can always decide further down the line if it’s the right place for your savings but at least you will have started the clock ticking.
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So you’ve been saving diligently into the best Lifetime ISA and now you want to use the cash – what happens next?
What if you’re planning to use your LISA for retirement? These rules could change but currently:
You can hold a Help to Buy ISA and a Lifetime ISA. But if you hold both, you can only use the government bonus towards buying a house via one of the accounts.
You can transfer a Help to Buy ISA into a LISA but the amount you transfer will count towards your yearly £4,000 limit. For example, if you transfer £3,000, you can only save another £1,000 in that year.
While you may be able to get a bigger bonus with a LISA (the maximum possible bonus with a Help to Buy ISA is £3,000) LISAs offer less flexibility if you want to withdraw your money.
A 25% withdrawal charge generally applies to unauthorised LISA withdrawals, with a reduced 20% charge available from 29 October 2026 for qualifying first-home purchases above £450,000. This isn’t the case with the Help to Buy ISA.
Remember, it’s not easy to access your money tied up in a LISA – the withdrawal charges can be expensive, so don’t save more than you can afford to lock away. See our guide on government schemes to help you buy a home.
If you think you might need to access your savings you should consider another type of savings account.
Ask your LISA provider to transfer the money directly to your conveyancer, rather than withdrawing it yourself. Your conveyancer will arrange for the funds to be used towards your purchase.
You’ll usually need a deposit of at least 5%, and a Lifetime ISA can help you save towards it. However, it is possible to get a mortgage with a smaller or even no deposit. Read our guide to First time buyer mortgages for help finding a deal.
You can withdraw without a charge for a qualifying first-home purchase, from age 60 or if you’re terminally ill.
From 29 October 2026, purchases above £450,000 attract a reduced 20% charge if the other purchase rules are met. Other unauthorised withdrawals generally attract a 25% charge, taking some of your own savings as well as the government bonus.
HomeOwners Alliance Ltd is registered in England, company number 07861605. Information provided on HomeOwners Alliance is not intended as a recommendation or financial advice.
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