New research reveals that the Lifetime ISA (LISA) is playing a bigger role than ever in helping first-time buyers build their deposit and secure their first home.
New research reveals that the Lifetime ISA (LISA) is playing a bigger role than ever in helping first-time buyers build their deposit and secure their first home. During the 2024/25 tax year, thousands more buyers turned to a LISA to boost their savings and take advantage of the government bonus.
More First-Time Buyers (FTBs) Using LISAs to Buy Their First Home
According to the latest figures, 82,750 LISA account holders used their savings to purchase their first home, an increase of around 30,500 buyers compared to the previous year.
The average withdrawal for a home purchase rose to £15,782 in 2024/25, which was up by £857. This highlights how important these savings products have become for aspiring homeowners trying to get onto the property ladder.
A significant driver behind this surge is likely the rush from FTBs keen to complete their purchase before the stamp duty changes came into effect in April 2025.
A Rise in LISA Withdrawal Charges
While more people are using LISAs for their intended purpose, the number of savers facing withdrawal penalties has also increased.
A LISA allows penalty-free withdrawals only when:
- You are buying your first home (priced at £450,000 or less)
- You are aged 60 or over
- You are terminally ill (with less than 12 months to live)
If you withdraw funds for any other reason, a 25% government charge applies. This can mean that you are receiving less than what you paid in.
During the 2024/25 tax year, LISA withdrawal charges reached £102 million, up from £75.3 million the previous year. This reinforces the importance of exploring alternative options before making an unauthorised withdrawal from your LISA.
If you’re considering accessing your LISA early, speaking to a professional first may help you avoid unnecessary costs.
Need Help Setting Up a Lifetime ISA?
If you’re a first-time buyer and want to know whether a Lifetime ISA could help you save for a deposit faster, our sister company, Chrysalis Wealth Management , who specialise in Pensions , Savings & Investments , can help guide you through the process. They can explain how a LISA works, whether it suits your long-term goals and help you set one up confidently.
Please note that that our Pensions, Savings & Investment service is arranged on a introduction only basis to Chrysalis Wealth Management Ltd.
Ready to Buy Your First Home but Not Sure Where to Start?
FTBs face many decisions and starting the mortgage process can feel very overwhelming and that’s where we come in! We are here to help make the process as simple and stress-free as possible. We’ll help you understand your options, compare products, explain the jargon and try to help you get you one step closer to purchasing your first home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Source:
https://uk.finance.yahoo.com/news/lifetime-isa-savers-clobbered-102-104936374.html?guccounter=1
