Key differences at a glance
The Lifetime ISA allows you to save up to £4,000 per year with a 25% bonus, giving a maximum annual bonus of £1,000. The Help to Buy ISA capped contributions at £200 per month, with a maximum total bonus of £3,000. The LISA bonus has no overall lifetime cap for property purchases.
The LISA bonus is paid monthly into your account, meaning it can earn interest or investment returns. The Help to Buy ISA bonus is only paid at the point of purchase through your solicitor. This timing difference can affect how you plan your deposit.
Property price limits
Both schemes limit the property price to £450,000. However, the Help to Buy ISA has a lower cap of £250,000 for properties outside London. The Lifetime ISA applies the £450,000 limit nationwide, making it more flexible for buyers in areas with higher property prices.
If you are buying outside London and the property costs between £250,001 and £450,000, the Lifetime ISA bonus can be used but the Help to Buy ISA bonus cannot. This is an important distinction for buyers in many parts of southern England.
Can you have both?
You can hold both a Help to Buy ISA and a Lifetime ISA at the same time, but you can only use the bonus from one of them towards the same property purchase. You cannot claim both bonuses on a single transaction.
If you have both, it generally makes sense to use the Lifetime ISA bonus because it is likely to be larger. You can still withdraw your Help to Buy ISA savings to put towards the purchase, just without the government bonus on those funds.
Withdrawal penalties
If you withdraw money from a Lifetime ISA for anything other than buying your first home or retirement after age 60, you face a 25% penalty. This effectively means you lose the bonus and 6.25% of your own savings on top.
The Help to Buy ISA has no withdrawal penalty. You can take money out at any time without losing your own savings, though you will forfeit the government bonus if the withdrawal is not for a qualifying property purchase.