Using a Lifetime ISA to Build a House Deposit Plan

You can open a LISA if you're a UK resident aged 18 to 39, and you need to make your first contribution before turning 40. In most cases, you can continue contributing until the day before your 50th birthday.

The main planning numbers are the £4,000 annual contribution limit and the 25% government bonus, which means up to £1,000 extra each tax year. The LISA contribution limit also counts toward your overall ISA allowance (commonly £20,000, but always check current tax-year rules).

For a first-home purchase, the property and purchase process must meet the qualifying rules and the purchase must be funded with a residentialmortgage. If you do not use it for a qualifying first-home purchase, you can usually keep the account for retirement and access it from age 60 under the applicable rules.

A 25% bonus means your savings plan has a built-in accelerator. If you contribute the full £4,000 in a tax year, the government bonus adds £1,000 before any interest or investment growth.

That is why many first-time buyers use the LISA as the core of the deposit plan, then use other savings accounts to cover overflow savings, flexibility, or upfront costs.

In 2026, widely available high-LTV lending (including 95% deals) can make a LISA-led deposit plan more practical, but affordability and lender criteria still determine what you can actually borrow.

Mortgage Guarantee Scheme (HM Treasury guidance)(opens in new tab)

Start with a contribution level you can sustain. A consistent plan is more useful than an aggressive target that gets paused after a few months.

In practice, that means setting a realistic monthly baseline, deciding in advance whether occasional top-ups are likely, and reviewing the plan every few months instead of changing it constantly. It also helps to track LISA savings separately from non-LISA savings so you do not accidentally use your deposit pot to cover upfront costs.

If you can contribute earlier in the tax year, the bonus may arrive earlier and any interest or returns can begin compounding sooner. But the right approach depends on your cashflow stability.

Even monthly contributions are often easier to maintain and budget. Front-loading can improve bonus and interest timing if you have cash available early in the tax year, but only if it does not leave your wider budget exposed. The main mistake to avoid is drifting past the 5 April deadline and losing a year's bonus opportunity.

The government bonus is claimed by your LISA provider after your contributions are made. In practice, people often experience this as a monthly bonus process rather than an instant credit at the moment they transfer money.

Many providers credit the bonus within a short period after claiming (often a matter of working days), but exact timings vary by provider and processing cycle.

That matters because your timeline should focus on when funds are likely to be available, not just what your eventual bonus total should be, and definitely not what you hope will arrive by a certain date.

If you pay in around £333 in one month, the expected bonus amount is roughly £83.25. The exact timing of when that bonus appears depends on your provider's process and claim cycle.

For planning, treat bonus timing as a real dependency and keep a small buffer rather than assuming every contribution and bonus lands at the perfect time.

Use official guidance for rule checks, then confirm operational timings directly with your provider when you're approaching a purchase.

The chart below shows an illustrative deposit-growth path if someone contributes the full £4,000 each year and earns a typical cash-LISA rate (example assumption: 4.5% AER in a strong cash-LISA market).

These figures are for planning context only. Actual outcomes depend on contribution timing, provider rate, and account type.

If both partners are eligible and both have a LISA, a joint purchase can benefit from two separate annual bonuses. Over 5 years, that can mean up to £10,000 in combined government bonus if both partners maximise contributions each year.

A practical workflow is to estimate your likely savings pot at 12, 24, 36, or 60 months in the ISA Calculator, then use that deposit amount in the Mortgage Calculator to test LTV and monthly payment outcomes. Repeat the same exercise with a larger deposit target so you can compare the trade-off between waiting longer and borrowing sooner.

The safest timing strategy is to open the account early, top up before each 5 April deadline where possible, and get your mortgage planning moving before you are close to exchange. When a purchase becomes real, give your solicitor enough time to request LISA funds (many buyers plan a 1 to 2 week buffer, but provider and solicitor timelines vary).

Throughout the process, treat the £450,000 property limit as a hard planning constraint and keep checking it against the area and property type you're targeting.

If you want a deeper step-by-step on the withdrawal process itself, this related article will cover that separately: Lifetime ISA Withdrawal Rules for First-Home Buyers.

• Missing the tax-year deadline and losing one year's bonus opportunity.
• Planning only for the deposit and forgetting legal fees, surveys, and moving costs.
• Assuming the LISA bonus removes the need for an affordability check.
• Treating the bonus as immediately available cash in the purchase timeline.
• Not understanding that the 25% withdrawal penalty on non-qualifying withdrawals can reduce your own contributed capital as well as the bonus.
• Not checking the current rules on how many LISAs can be used in the purchase process and how your provider handles the withdrawal request.

Whether you're 12 months away from buying or building a 3- to 5-year plan, the main win is the same: put your LISA inside a real timeline with contribution targets, bonus timing, and mortgage decision checks.

• Set your deposit target (5%, 10%, or 20%) and target property range.
• Build your LISA contribution plan and review it quarterly.
• Track non-LISA savings for upfront costs and flexibility.
• Re-test mortgage outcomes as your deposit grows.
• Verify current rules with GOV.UK, your provider, and your solicitor before purchase.