A Lifetime ISA (LISA) is a government-backed savings product designed to help first time buyers build a deposit for their first home.

If you’re buying in Cambridge, where property prices are often higher than the UK average, a LISA can provide a useful boost to your savings.

How The Lifetime ISA Works

You can open a Lifetime ISA between the ages of 18 and 39. Each year, you can save up to £4,000, and the government will add a 25% bonus, up to £1,000 annually. The bonus is added monthly, so the sooner you start saving, the more you can benefit over time.

Funds can be used either to buy your first home or for retirement once you reach age 60. For property purchases, the account must have been open for at least 12 months before the money is released.

Using a LISA to Buy a Home in Cambridge

If you’re using your Lifetime ISA to buy your first home, the property must be valued at £450,000 or less and bought with a mortgage. The money is transferred directly to your solicitor and forms part of your deposit.

In Cambridge, where the average property price often sits near or above national thresholds, the £450,000 limit is an important consideration. It’s best to check current local prices early on to make sure your savings plan matches your target property.

What to Consider Before Opening a LISA

Withdrawals for anything other than a first home or retirement are subject to a 25% charge. This means you could lose more than just the bonus if you take the money out early. You’ll also stop receiving the bonus once you turn 50, although your savings can stay in the account and continue earning interest.

If you’re using your LISA to buy a home, don’t withdraw the money yourself once you’ve reached your savings goal. The funds must stay in the account and will be transferred directly to your solicitor when you’re ready to complete your purchase.

You must be a first time buyer in Cambridge to use a LISA for property. If you’ve owned a home before, even if it wasn’t in the UK, you won’t be eligible to use the funds in this way.

Always make sure to check the official government documentation to fully understand the Lifetime ISA criteria. You can find this information here: https://www.gov.uk/lifetime-isa.

When to Open a Lifetime ISA

The earlier you open a Lifetime ISA in Cambridge, the more you can benefit from the government bonus. Since you need to have the account open for at least 12 months before using the funds to buy a home, it’s worth opening one as soon as you start thinking about saving for a deposit.

Even small, regular contributions can build up over time and with the added bonus, your savings will grow faster than in a standard savings account. Opening a LISA early gives you flexibility and helps keep your deposit plans on track, especially if you’re aiming for a property in Cambridge where average prices can push the £450,000 limit.

Speak to a Mortgage Advisor in Cambridge

If you’re planning to use a Lifetime ISA in Cambridge as part of your mortgage deposit, our advisors can explain how it fits into your overall plan. They’ll check how your deposit affects your borrowing options and guide you through the mortgage process from start to finish.

You can book a free appointment with one of our mortgage advisors in Cambridge at a time that suits you.

Date Last Edited: July 1, 2025