Using a Lifetime ISA to Buy your First Home

Published 30 Jun 2026

If you’re saving for your first home, chances are you’ve heard of a Lifetime ISA (LISA). With the Help to Buy ISA scheme now largely phased out, Lifetime ISAs have become the main way many first time buyers boost their deposit with the help of a government bonus.

At Millar McCall Wylie, they regularly act for buyers using a Lifetime ISA. While it’s a valuable savings tool, it does come with strict rules and timelines that are important to understand early on. Here’s a guide to how Lifetime ISAs work and how to avoid delays when you’re ready to buy!

What is a Lifetime ISA?
A Lifetime ISA allows first time buyers to save towards a home with the benefit of a 25% government bonus. You can contribute up to £4,000 per tax year, and the government will add a bonus of up to £1,000 per year.

The property you’re buying must have a purchase price of £450,000 or less, and the account must have been open for at least 12 months before the funds can be used towards a home purchase.

If you previously opened a Help to Buy ISA, you can still use it, but no new Help to Buy accounts can be opened. Existing Help to Buy ISA holders have until 2029 to continue saving and until 2030 to use the funds. It is important to note that if you have both a Help to Buy ISA and a Lifetime ISA, you cannot use both of these and avail of a bonus from each account.

Timing is Everything
One of the most important things to understand about a Lifetime ISA is that the funds cannot be drawn down instantly.

When you’re starting to look seriously at properties, it’s essential to:

• Speak to your Lifetime ISA provider early to understand their drawdown process and timescales
• Tell your solicitor at the very beginning that you’ll be using a Lifetime ISA. While your solicitor will guide you through the legal steps, the responsibility for ensuring there is enough time to access your funds ultimately sits with you. Early communication helps avoid unnecessary pressure or delays later in the process

Lifetime ISA funds must be drawn down before completion of your purchase. They cannot be accessed after you have completed on the property and attempting to do so would be considered fraudulent. Your solicitor will handle the formal request for the funds, but only once all requirements are met and the timing is right.

What can (and can’t) a Lifetime ISA be used for?
It’s also important to be clear about what your Lifetime ISA funds can be used towards. They can only be used for your purchase deposit. They cannot be used for:

• Furniture or appliances
• Legal fees
• Stamp Duty
• Removal costs or other expenses
• It’s vital to discuss your overall budget with your mortgage advisor and ensure you
  have separate funds set aside for these additional costs.

Buying a new build? Take extra care
If you’re buying a newbuild property, there are a few additional points to be aware of. Developers often require a contractual deposit of 5% or 10% when contracts are signed. Lifetime ISA funds are not considered “readily available” in the same way as cash savings, so it’s essential to:

• Tell the selling agent and builder as early as possible that your deposit includes Lifetime ISA funds
• Confirm whether your LISA funds can be used towards the contractual deposit

There is also a strict rule that completion must take place within 90 days of drawing down your Lifetime ISA funds. This is particularly important if you are buying a property that is still under construction and may not be ready for several months. Your solicitor can advise you on how this impacts your transaction.

Planning ahead makes all the difference
A Lifetime ISA can make a real difference when buying your first home, but only if it’s used correctly. The key is early planning, clear communication, and realistic budgeting.

At Millar McCall Wylie, they will guide you through the legal process and liaise with your ISA provider where required. Letting us know about your Lifetime ISA from the very beginning helps ensure everything runs smoothly, so you can focus on the excitement of buying your new home!