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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 October 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.
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.
KEY INFORMATION
Lifetime ISAs will be scrapped and a brand new First Time Buyer ISA will be launched to help first time buyers, under government proposals in a consultation launched on 23 June.
The consultation closed on 18 August 2026 and the government says it is now considering the responses before finalising the design of the new First Time Buyer ISA.
Lifetime ISAs have proved controversial because if you need to withdraw your savings for any other reason than buying a house or for your retirement, as the Treasury Committee said in June 2025, people don’t just lose the government bonus – they’ll lose 6.25% of their own savings too.
Some first time buyers who have been hit by this charge include those buying a house costing over £450,000 – which you’re not allowed to use LISA savings for.
In the Budget 2025, the government announced it would publish a consultation in early 2026 on the implementation of a “new, simpler ISA product to support first time buyers to buy a home”.
Under the plans announced by the government:
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 | 4.69% (inc 1.58% AER variable bonus in first year). | Yes. Different rates apply on transfers in. | App | Annually |
| Tembo | 4.56% (inc 1.01% 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 to buy any 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 towards a home purchase it 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.
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. With LISAs you’ll need to pay a penalty if you withdraw your money for any reason other than buying a home or for your retirement. This isn’t the case with the Help to Buy ISA.
Remember, there is no guarantee that future governments will maintain these offers, which means there could be a risk to bonuses. And it’s not easy to access your money tied up in a LISA – the withdrawal payments are 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 form of savings accounts.
When you’re ready to buy your first home, ask your LISA provider to transfer the money from your LISA directly to your conveyancer, not to you. (If you withdraw it into an account in your name, you’ll pay a hefty withdrawal charge). All your savings, including your bonus, will be available to use when you exchange.
You’ll usually need to save a deposit of at least 5% – and using a Lifetime ISA may offer you a big boost in getting there. And you’ll need to shop around for the best mortgage too. Find out more in our guide on First time buyer mortgages.
You can withdraw your savings to buy your first home, providing you meet the criteria. Or when you reach 60 or if you’re diagnosed with terminal ill health. But you’ll have to pay the penalty of 25% on your savings if you want to withdraw it in any other circumstance
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