Lifetime ISA calculator (LISA)

The 25% charge applies to the total amount withdrawn, including your own contributions, not just the government's top-up. Paying in £4,000 gets a £1,000 bonus, for a total of £5,000 — a 25% charge on that £5,000 is £1,250, leaving £3,750. That's £250 less than the £4,000 you actually paid in, so you genuinely lose money on your own savings, not just the free bonus, even before accounting for any interest.

The property must be your only or main residence, cost £450,000 or less, and you must be a first-time buyer (never previously owned property, anywhere in the world). You also need to have held the Lifetime ISA for at least 12 months before using it for a house purchase.

Help to Buy ISAs closed to new applicants some years ago, so a Lifetime ISA is now the main government-boosted option for first-time buyers. Compared to a regular savings account or Cash ISA, the 25% bonus is a significant head start — but weigh it against the £450,000 property cap and the 25% penalty if your plans change and you need the money for something else.

Yes — you can hold and pay into multiple types of ISA in the same tax year, as long as your total contributions across all of them don't exceed the £20,000 overall ISA allowance, of which at most £4,000 can go into a Lifetime ISA. See the Cash ISA calculator for the other side of that allowance.