First-time buyer Isa v lifetime Isa – which one should you choose?
Despite plans to scrap the lifetime Isa, experts still advise you open one now and not wait for the new first-time buyer account to launch If you want to start saving towards your first home, don’t wait until a new Isa just for first-time buyers goes on sale. That is the advice from experts after more details emerged about a savings account the government plans to launch to help people get a foot…
A new ISA for first-time homebuyers is expected to launch in 2028, but experts recommend opening a lifetime ISA now to take advantage of the current government bonus. The first-time buyer ISA will have a £4,000 annual contribution limit, a £450,000 property price cap, and a 25% penalty for withdrawals exceeding this limit. Money saved in the account will earn a 25% bonus up to £1,000 per year.
Although the new ISA will be more user-friendly, with no upper age limit or withdrawal charges, savers may miss out on potential interest or investment growth if the bonus is paid as a lump sum at the time of purchase. Those with existing lifetime ISAs cannot transfer them to the new ISAs, and transfers between cash ISAs and the first-time buyer ISAs are limited.
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