Help to Buy ISA or Lifetime ISA?

If you’re looking to make the most of your savings, you’re probably interested in getting a Lifetime ISA, or a Help to Buy ISA. If you manage your finances well, both can prove a great way to make your money stretch further, but which is best for you? In this guide, we break down the pros and cons and look at different scenarios.

What’s the difference between a Help to Buy ISA and a Lifetime ISA?

Help to Buy ISA

This type of ISA has been available since 1 December 2015.

Quick facts:

  • Designed for first-time buyers, aged over 16 who are looking save up a deposit for their home.
  • The government adds 25% to your savings, for a maximum bonus of £3,000.
  • You can use it to buy a home worth up to £250,000 (or under £450,000 in London).

Lifetime ISA

This new type of ISA won’t be available until 6 April 2017.

Quick facts:

  • Designed to help people aged between 18 and 40 save up for their first home, or retirement.
  • The Government will give you a bonus worth 25% of what you pay in, up to a maximum of £4,000 per year.
  • You can use it to buy a home worth up to £450,000 anywhere in the country.
Find out more in A guide to Lifetime ISAs.

Which one should I get?

Well that really depends on your personal circumstances. We’ve put together a few scenarios to help you make up your mind.

I qualify for both and I’ve decided to get a Lifetime ISA

Even if the Lifetime ISA represents the best option for you, it’s a good idea to open a Help to Buy ISA. That’s because the Lifetime ISA isn’t available until April 2017 whereas the Help to Buy ISA is on the market now.

Once you’ve signed up for a Help to Buy ISA, there’s nothing to stop you transferring it to a Lifetime ISA as soon as they’re available. However, you will only be able to use the bonus from one of the ISAs to buy a house.

I need to buy a property quickly

The Lifetime ISA doesn’t launch until April 2017 and even then you’ll have to wait at least a year before you can use one to buy a home.

The Help to Buy ISA, on the other hand, will pay out a maximum bonus of £400 after just three months (you’ll need to put in the maximum amount of £1,200 in month one, and £200 in month two and three).

I already own a home

If you’re not a first-time buyer, then you can’t take out a Help to Buy ISA.

I’m over 40 and a first-time buyer

You need to be aged between 18 and 40 to qualify for a Lifetime ISA.

I’m over 40 and have already owned a home

Unfortunately, you’re not eligible for either product.

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