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The Top 5 Differences: Help to Buy ISAs Vs. Lifetime ISAs
25 November 2019

If you are a first-time buyer looking to get onto the property ladder and think one of the Government’s ISA schemes will help you, it is a good idea to know the differences between the two options currently available. Here we explain the five biggest differences between the Help to Buy ISA and the Lifetime ISA.


Different Bonuses and Payment Options

The Lifetime ISA allows you make much bigger savings than is possible with the Help to Buy ISA. The latter only lets you save a maximum of £2,400 per year, while the Lifetime ISA has a much higher ceiling of £4,000 per year. This means the maximum amount of additional money the Government will add on top of your savings with a Lifetime ISA is £32,000, while the Help to Buy ISA maxes out at a total of £3,000.

On a related note, the Lifetime ISA is a lot more flexible with regards to how you make your payments, assuming they do not surpass the £4,000 per year cap. While the Help to Buy scheme requires a maximum payment of £200 per month to achieve the maximum bonus, the Lifetime ISA lets you reach the cap by paying lump sums of differing amounts in different months.


Interest on Government Bonus Payments

The Lifetime ISA has another advantage over the Help to Buy version, as it lets you accrue interest on the Government’s bonus payments. The bonuses are earned annually (though paid monthly) which means you can earn interest on those sums on top of your own savings.

The Help to Buy ISA doesn’t have this option as the bonus payments are only available and accessible to you once you purchase a property. The 25% bonus must be applied for by the conveyancing solicitor conducting the conveyancing process during the purchase of your first house.


House Buying Options

The two ISAs also provide different house buying options. The Help to Buy scheme is much more limited as it is restricted to homes costing a maximum of £250,000. The only exception is for homes in London, where the cap is raised to £450,000. You also cannot use a Help to Buy ISA to purchase a buy-to-let property.

The Lifetime ISA lifts the maximum house cost to £450,000 across the whole country, not just the capital, plus you can use it to buy any kind of property for any purpose. Of course, if you don’t want to buy a property you can put the Lifetime ISA payments towards your pension income after you reach sixty years of age.


Timeframes and Age Restrictions

Perhaps the most significant difference to a great many people is that the Lifetime ISA is only available for those aged 39 or under. People aged 40 years or more can only apply for the Help to Buy ISA, although this scheme is being wound down and will very shortly be eliminated entirely so that only the Lifetime ISA remains.

The Help to Buy ISA is available to any first time buyers aged 16 or above. In contrast, the Lifetime ISA is only available once you turn 18.


How soon do you intend to purchase a house

With the Help to Buy ISA, to get the bonus you are also required to save a minimum of £1,600, which means you may only need to save for three months before qualifying for the Government bonus.

With the Lifetime ISA account, you need to save for at least a year before you are eligible for the Government bonuses.


If you need advice regarding Help to Buy or Lifetime ISA applications and accounts, call Fenton Simpson on 01904 435185 to speak to one of our friendly, expert advisors.



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