If you’re saving towards your first home, it’s worth knowing how a Lifetime ISA could help you get there faster. Introduced by the government to support younger savers, a Lifetime ISA offers a valuable bonus on top of what you put away. For many people, it’s one of the most effective ways to build a deposit for a mortgage, especially if you’re a first time buyer in Liverpool.
At Liverpoolmoneyman, we speak to buyers daily who are exploring different ways to boost their deposit. Whether you’re just starting to save or already have money set aside, we’ll explain how the Lifetime ISA works and how it can support your property plans.
How Does a Lifetime ISA Work?
A Lifetime ISA (also known as a LISA) is a type of savings account available to people aged between 18 and 39. You can save up to £4,000 each tax year, and the government will add a 25% bonus to whatever you put in. That means if you save the full £4,000 in a year, you’ll receive an extra £1,000, completely tax-free.
The funds in your LISA can be used to buy your first home, as long as the property is worth £450,000 or less. Alternatively, the money can be used for retirement once you turn 60. If you withdraw the money for any other reason, a penalty usually applies, which means you may get back less than you put in.
Who Can Use a Lifetime ISA to Buy a Home?
To use a Lifetime ISA for a property purchase, you must be a first time buyer, which means you’ve never owned a home or held a legal interest in a property, either in the UK or abroad. The property you’re buying must also be your main residence, not a buy to let or second home.
The LISA can be used to help with the deposit, and your solicitor will handle the withdrawal process during the purchase. If you’re buying a home with someone else who also has a Lifetime ISA, you can both use your bonuses towards the same property, as long as you both qualify as first time buyers.
How Does the Lifetime ISA Affect My Mortgage?
One of the biggest benefits of the Lifetime ISA is that it can increase the size of your deposit. This not only helps you meet lender requirements, but may also improve the range of mortgage deals available to you.
In some cases, having a larger deposit can mean access to lower interest rates or more flexible mortgage terms. Lenders will still carry out their usual affordability checks, looking at your income, credit history, and monthly outgoings. But the extra contribution from the LISA can improve your position and reduce the amount you need to borrow.
If you’re already saving in a LISA, let your mortgage advisor know from the start so they can factor the bonus into your deposit total. If you haven’t opened one yet, we can talk through the rules and help you decide whether it’s worth setting one up before you apply for a mortgage.
Can I Still Use a Lifetime ISA If I’ve Already Started Saving?
Yes, even if you’ve already saved money elsewhere, you can still use your Lifetime ISA and start contributing within the annual limit. You might choose to move some savings into the LISA gradually, or use it alongside your existing deposit to boost your bonus amount.
The earlier you open the account, the better, as the bonus is paid each year and adds up over time. If you’re planning to buy in a year or two, you may be able to build up a useful bonus by then. Just keep in mind that the account must be open for at least 12 months before you can use the funds to buy a property.
We’ll help you understand how the LISA fits into your overall deposit and when it would be eligible to use during the buying process.
Date Last Edited: November 3, 2025
