Lifetime ISA vs Help to Buy ISA: Which Is Better in 2026?
The Help to Buy ISA closed to new accounts in November 2019 but existing holders can still contribute until November 2029. The Lifetime ISA launched in 2017 and offers bigger bonuses but stricter rules. Here is the 2026 comparison for UK first-time buyers.
| Factor | Lifetime ISA | Help to Buy ISA |
|---|---|---|
| Status | Open to new savers (18-39) | Closed to new accounts since Nov 2019 |
| Annual contribution limit | £4,000 | £2,400 (£200/month after first month) |
| Government bonus | 25% on contributions, paid monthly | 25% on contributions, paid at purchase |
| Max bonus lifetime | £33,000 (if funded age 18-50) | £3,000 |
| Property price cap | £450,000 anywhere in UK | £250,000 (£450,000 London) |
| Age limit to open | 18-39 | Was 16+; closed |
| Age to use penalty-free | 12 months after first contribution | Any time |
| Non-property withdrawal penalty | 25% of withdrawal (forfeits bonus + ~6% of own money) | None — but you forfeit bonus |
| Retirement use | Penalty-free from age 60 | None |
| Best for | New savers aged 18-39 buying homes up to £450k | Existing holders still saving below £250k cap |
Our Verdict
For anyone opening a new account, the Lifetime ISA is the only option — the Help to Buy ISA has been closed to new savers since 2019. Even where you could hold both, the LISA is usually superior: higher contribution limit, higher property cap (£450k nationwide vs £250k outside London), and the retirement back-up option at 60. Existing Help to Buy ISA holders should consider transferring to a LISA — you can move up to £4,000/year without affecting your new contribution allowance.
Why this comparison matters
First-time buyers in 2026 face the toughest affordability conditions in a generation — average deposits exceed £45,000. Both ISAs offer a 25% government top-up, potentially worth thousands. Choosing correctly — or optimising both — can accelerate your purchase by 1-2 years.
Quick Verdict
New saver: LISA. Existing Help to Buy ISA holder: keep it open if you are buying under £250k soon, otherwise transfer to a LISA.
When the Lifetime ISA wins
- You are opening a new first-time-buyer savings account — it is your only option.
- You plan to buy a property between £250,001 and £450,000.
- You might use the account for retirement (LISA unlocks at 60 penalty-free; HTB ISA does not).
- You want a bigger annual bonus (up to £1,000/year vs £480 for HTB ISA).
When the Help to Buy ISA wins
- You already hold one and your target property is under £250,000 (or £450k in London).
- You might withdraw for non-property purposes — HTB ISA has no early-withdrawal penalty.
- You need bonus money on a purchase within 12 months (LISA requires 12 months from first contribution).
The bonus math
LISA: £4,000/year × 25% = £1,000 bonus per year, up to age 50 — £33,000 lifetime maximum. HTB ISA: £200/month × 25% = £50/month, capped at £3,000 total bonus. A 25-year-old maxing a LISA to age 50 plus modest growth can accumulate £180,000+ for a first home. Model numbers in the LISA calculator and Help to Buy ISA calculator.
FAQs
Can I have both? Yes, but you can only use the bonus from one on a single property purchase.
Can I transfer HTB ISA to LISA? Yes, up to £4,000/year without affecting your new LISA allowance.
What if I don't buy a house? HTB ISA: no penalty — keep the cash (lose only the bonus). LISA: 25% early withdrawal penalty unless you wait till age 60.
Is the LISA worth it if I already own a home? Only as a retirement vehicle — contributions still earn 25% bonus, accessible at age 60.
See if you can afford a home with our mortgage affordability calculator.