A Lifetime ISA is a type of government-backed savings account that comes with 25% government bonuses (up to £1,000 per tax year). It can be used towards buying your first home, or to fund retirement from age 60.
With a Lifetime ISA, you can pay in up to £4,000 per tax year, and you'll get a free 25% government bonus after each time you pay in - these take 4-6 weeks to land in your account and are 25% of what you have put in, up to £1,000 per tax year.
There are some key rules to be aware of before you open a Lifetime ISA:
You must have your Lifetime ISA open for at least 12 months before being used to buy a home.
You must be aged 19-39 years old to open a LISA and make your first payment into the account before you're 40 years old.
You can put up to £4,000 in each tax year until you're 50 years old
If you withdraw your funds to use for something other than purchasing your first home, or funding retirement once you've reached 60, you'll be subject to a withdrawal charge, meaning you may get back less than you paid in.
If you want to use a Lifetime ISA to purchase your first home, the property you buy must be in the UK, be your first home anywhere (not just in the UK), and be less than £450,000. You have to live in the property once you buy it (i.e. you can’t use a LISA to buy a property you want to rent out), and you need to be using a mortgage to buy the property (i.e. you can’t pay for it in full upfront). Read more here
Want a bit more meat on the bones? We've written a full guide here