Lifetime ISA: bonus or trap?
Lesson 9 of 12 in our free Saving & Emergency Funds guide: a 5-minute money game with the key points below.
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Questions you'll answer
Mo pays £4,000 into a LISA. With the 25% bonus, what's in the pot (before any interest)?
Mo needs the £5,000 for something else and makes an unauthorised withdrawal. With the 25% charge, how much does he get back?
Who's LISA-curious for the right reason?
Quick facts
- Myth: “The LISA withdrawal charge only takes back the bonus.” — It's 25% of the whole withdrawal, so you lose some of your own money too.
- Fact: “You can use a LISA to buy a first home costing up to £450,000.” — That's the property price cap. Above it, the charge applies.
- Fact: “You must open a LISA before your 40th birthday.” — Open between 18 and 39. You can keep paying in until 50.