As a first-time buyer in the UK, saving for your deposit can feel overwhelming, especially with rising property prices. Government-backed schemes like the Help to Buy ISA (HTB ISA) and Lifetime ISA (LISA) offer valuable bonuses to help you get on the property ladder. But with recent announcements in the Autumn Budget 2025, it’s essential to understand the latest rules.
This blog compares the HTB ISA and LISA, highlighting key features, eligibility, and when each might suit you best. Whether you’re in London, Surrey, or anywhere across the UK, these schemes can boost your savings but they come with specific limits and conditions.
What is the Help to Buy ISA and How Does it Work in 2025?
The Help to Buy ISA was designed to support first-time buyers by adding a government bonus to your savings. Here’s the key information based on the most up-to-date guidance from official sources:
- Eligibility and Status: The scheme closed to new savers in November 2019. If you already have an HTB ISA, you can continue contributing until November 2029.
- Savings and Bonus: Save up to £200 per month (plus an initial £1,200 in the first month). The government adds a 25% bonus, up to a maximum of £3,000 on £12,000 saved. This bonus is only paid when you buy your first home.
- Property Limits: The home must cost no more than £250,000 outside London or £450,000 in London. Exceeding these caps means you won’t qualify for the bonus.
- Deadline for Bonus Claim: You must claim the bonus by November 2030.
- Access and Penalties: You can withdraw funds at any time, but if it’s not for a qualifying first-home purchase, you’ll lose the bonus. It’s primarily a cash-based savings account, ideal for low-risk saving.
The HTB ISA is straightforward and risk-free, making it a solid option if you already hold one and plan to buy soon within the price caps. However, it’s not as flexible for long-term growth compared to other ISAs. For more details, visit the GOV.UK Help to Buy ISA page
What is the Lifetime ISA and How Does it Work in 2025?
The Lifetime ISA (LISA) is a more versatile scheme, available to new savers and offering benefits for both home buying and retirement. Here are the key facts:
- Eligibility: You must be aged 18 to 39 when opening the account. You can contribute until you turn 50.
- Savings and Bonus: Contribute up to £4,000 per tax year, with a 25% government bonus – that’s up to £1,000 extra per year. Funds can be held in cash (for stability) or stocks and shares (for potential growth).
- Property Limits: For first-home use, the property must cost no more than £450,000 anywhere in the UK.
- Dual Purpose: Use it for buying your first home or save for retirement (penalty-free withdrawals from age 60).
- Access and Penalties: Withdrawals for non-qualifying reasons (before age 60 and not for a first home) incur a 25% penalty, which could reduce your original savings.
In 2025, the LISA remains open and is particularly appealing if you’re under 40 and want higher contribution limits or investment options. It’s a great fit for those in high-cost areas like the South East, where property prices often push towards the £450,000 cap. For full rules, check the GOV.UK Lifetime ISA page.
Autumn Budget 2025: Potential Changes to the Lifetime ISA
The Autumn Budget 2025, announced on 26 November 2025, includes plans to consult on replacing the Lifetime ISA with a simpler product focused solely on first-time home buying, starting in early 2026. There are no immediate changes, so existing LISAs continue as normal, and new ones can still be opened. However, this could impact future savers, especially with the £450,000 property cap remaining frozen. Additionally, from April 2027, the cash ISA allowance will reduce to £12,000 for those under 65, though the overall ISA limit stays at £20,000. Stay updated via GOV.UK Budget documents.
Key Differences: HTB ISA vs LISA at a Glance
To help you decide which first-time buyer scheme suits you in 2025, here’s a simple comparison:
| Feature | Help to Buy ISA | Lifetime ISA |
| Open to New Savers? | No (closed since 2019) | Yes (if 18-39) |
| Annual Contribution Limit | Up to £2,400 (monthly limits apply; up to £3,200 in first year) | £4,000 |
| Max Government Bonus | £3,000 (lifetime) | £1,000 per year |
| Property Price Cap | £250,000 (UK) / £450,000 (London) | £450,000 (nationwide) |
| Investment Options | Cash only | Cash or stocks & shares |
| Withdrawal Penalty | Lose bonus if not for qualifying purchase | 25% on non-qualifying withdrawals |
| Contribution Deadline | November 2029 (for existing accounts) | Until age 50 |
| Bonus Claim Deadline | November 2030 | Ongoing (on qualifying use) |
As you can see, the LISA offers more flexibility and higher potential bonuses over time, but it requires careful planning to avoid penalties especially amid Budget discussions.
Which One Should You Choose in 2025?
- Choose HTB ISA if: You already have an account, plan to buy a home soon (within price limits), and prefer simple, risk-free cash savings. It’s still a viable option for existing holders aiming for that £3,000 bonus.
- Choose LISA if: You’re a new saver under 40, want to maximise annual contributions, or need a scheme that works for retirement too. It’s often the stronger choice for long-term growth, especially in expensive regions like London or Surrey. However, monitor Budget developments for potential reforms.
- A Note on Transfers: If you have an HTB ISA, you can transfer funds to a LISA, but this counts towards your £4,000 annual LISA limit. The original HTB bonus is only awarded on home purchase, so don’t expect an automatic extra bonus from the transfer.
Remember, both require you to be a first-time buyer (no prior property ownership, including with a partner). In the current UK housing market, with high prices in areas like the South East, the LISA’s nationwide £450,000 cap makes it more “future-proof” for many – but the frozen cap has drawn criticism.
Important Considerations Before Starting
Before opening or using either ISA for your first-time buyer journey in the UK:
1. Check your eligibility – age, first-time buyer status, and property plans.
2. Consider regional factors: In London or commuter areas like Surrey, price caps matter.
3. Think about timing: HTB deadlines are approaching, while LISA allows longer saving (but watch for 2026 changes).
4. Be aware of penalties: Non-qualifying withdrawals could cost you, with recent HMRC crackdowns on LISA penalties.
5. Consult a professional: Rules can be complex, and personal circumstances vary.
At KingsGate Finance, we specialise in mortgage advice for UK buyers, including commercial mortgages, will writing, and insurance. Our CeMAP-qualified mortgage and protection advisors provide personalised guidance to make mortgages simple.
Ready to make your first home a reality? Contact us today for an initial free consultation.
